How to Accelerate the SBA Loan Process

Capital is the fuel that allows small businesses to grow. However, many small business owners report they’re concerned about their ability to access capital. This is because they are either just starting out or may not have enough revenue to qualify for a traditional business loan. But there is a solution: a loan backed by the Small Business Administration (SBA).

What Are SBA Loans?

"SBA loans are a very important resource for Main Street entrepreneurs and small business owners, especially during challenging economic times when lenders may be reducing their appetite for risk," says Nicole McCourt, Director of SBA Lending at Fifth Third Bank. "SBA programs keep the capital flowing and ensure that small businesses, which are the heart of our economy, have the cash they need to grow and succeed."

For small business owners, understanding how the SBA process works and what it entails can accelerate the loan process—and put your business on the path to accessing capital more quickly.

How SBA Loans Help Businesses

Small business owners may not be ideal candidates for traditional business loans. New businesses, for example, may not earn enough revenue to meet conventional lending requirements. Business owners may not have taken a salary in the early days of their companies, or they may have a bankruptcy or debt in their credit history.

"The beauty of the SBA program is that it’s really come as you are," McCourt says. "You don’t need to have the same amount of collateral or check all the boxes a conventional loan requires."

That’s because the SBA backs these small business loans, guaranteeing up to 100% of the loan amount. That allows banks and other SBA lenders to take on more risk and gives entrepreneurs options beyond high-interest debt and expensive loan products. Because of the government guarantee, SBA loans tend to have interest rates and terms that are comparable with other conventional loans.

There are a variety of SBA loan products to keep affordable capital open and available to many small businesses, whether the borrowers are new to entrepreneurship or seasoned business owners.

As a preferred SBA lender, Fifth Third Bank makes accessing SBA loans even faster. The bank’s preferred lender status gives Fifth Third the authority to make all the decisions associated with the loan—from applications to fund disbursement—without having to wait for approval from the government agency. "Waiting on a loan from a lender that doesn’t have preferred status could take two to three times as long," McCourt says. In addition to being a preferred SBA lender, Fifth Third also extends fixed-rate SBA loans, which are not offered by all lenders.

Preparing for an SBA Loan

Running through all the options available in conventional and SBA loans on your own can often lead to "deal fatigue," which is why it is recommended to begin the process with a loan expert who is well versed in both types of loans and can help make the decision process clearer and easier.

Follow these next few steps to help accelerate and better manage the SBA loan application process:

1. Research your eligibility.

While the SBA seeks to help a wide array of applicants, there are still some requirements that businesses and business owners must meet. For example, applicants must operate a for-profit business in the United States. You must also be considered a "small business," meaning you meet the SBA standards for revenue and/or employees. There are also a few ineligible business types, such as nonprofits, life insurance, or financial companies engaged in lending.

2. Understand your loan options.

The SBA has multiple loan programs aimed at funding various small business needs. Applicants can access capital for operational expenses, expansions, real estate construction projects, and more. "As long as your business meets the SBA qualifications, there’s not much we can’t finance," McCourt says. While it’s helpful to familiarize yourself with the SBA offerings, this is where Fifth Third’s SBA market specialists can help. They work with small business owners to determine which loan programs make sense for their needs.

3. Collect your documentation.

Your loan application will require multiple documents related to your business and personal finances. The SBA has an online checklist here. The basic information and documents the SBA requires include your business’s articles of formation, your EIN or tax ID number, and documents showing how your business is structured. Lenders will also want to see your business plan and anything that helps convey the story of your business and what you’ll use the loan to achieve.

4. Assess your credit.

While the SBA takes a more lenient approach to borrower’s credit history, it’s still important to know what your credit report includes. Small business owners—and all consumers—can request free copies of their credit reports from each of the three credit bureaus. Review your report to ensure it’s accurate, and request corrections from the credit bureaus if you find a mistake. Having an awareness of what’s in your credit report, both the positive and negative, reveals to lenders you’re taking the process seriously. Even if there’s something in there you don’t love, showing you understand what’s there demonstrates business sense and financial awareness.

5. Estimate how much you need to borrow.

You’ll want to come to the table with a general sense of how much money you’ll need. That said, many small business owners often underestimate their capital needs. "What we don’t want is for small business owners to borrow too little, and then not be able to achieve what they intended," McCourt says.

For example, the prospective owner of a CPA practice may believe they need $100,000 to acquire a business and only $10,000 for ramp-up expenses. But in reality, they may actually need three to six months of working capital. Fifth Third loan experts can provide an accurate assessment of what you need, such as looking at what four weeks of operational expenses look like for similar businesses in your area.

By preparing in advance, you can help accelerate the SBA loan application process and be on your way to meeting your capital needs sooner. Connect with your banker as early in the process as possible, and leverage an SBA Preferred Lender, like Fifth Third Bank, to your advantage. Fifth Third’s experts are able to help businesses of all sizes through different stages of development—from startup to growth and on to acquisitions and retirement.

Ready to apply for a SBA loan? Make an appointment with a Fifth Third Business Banking representative in your area who will help evaluate and complete your application.