In a perfect world, you’d be able to visit a lender and obtain all the working capital your business needs in one quick trip. For many business owners, however, this isn’t possible. The traditional commercial loan approval process can take weeks. If you are approved, you might have to wait several more weeks for your loan funds to arrive.
If you’re not approved? You’ll have to start the process over again.
Thankfully, there are ways to speed up loan approval and funding times. Educate yourself on both the traditional business loan approval process and the options available to you to speed things up.
The Approval Process
There are many moving parts in the loan approval process.
First, you must submit your business loan application. This sounds simple enough, but many lenders have a long list of requirements. You may need to provide a detailed business plan with your application. Additionally, the application itself is usually several pages long. You may even have to visit a physical branch of your financial institution to fill out the loan application by hand.
Once your loan application is finally complete, you can hand it over to the lender. The lender will likely request certain documents related to your business finances. Most lenders like to see credit reports and cash flow projections if you haven’t already provided them in your original application.
At this point, your application is out of your hands, and the lender will begin the application review. Traditional lenders take numerous factors into account when deciding if they will award you a business loan.
Chief among those factors is your ability to repay the loan. This is just one area where lenders may rely on your credit history to determine your trustworthiness as a borrower. If your business has little to no credit history, you’ll probably need to rely on your personal credit score to secure a loan.
The time it takes for commercial loan approval varies between applicants. For many business owners, the loan approval process takes several business days to a week. It can potentially take several weeks if the lender needs extra documents or more information. If your loan is approved, documents will be drawn up for you to sign. Once the lender ensures all your paperwork has been filled out correctly, you will finally receive your funding.
Even if you’re approved for a business loan, the length of time it takes to obtain your money can lead to complications. If these funds are for a time-sensitive needs, waiting several weeks isn’t always an option. Often, that gap in receiving funds could end with the loan becoming a moot point if the need or opportunity for which the loan is designated passes.
Fortunately, there are ways to get the money you need much faster.
Speeding Up the Loan Process
Experts agree there are various ways to streamline the loan approval process. Most important is knowing what information is expected of you and having it available for loan officers. If you don’t have the proper paperwork ready to go, it will definitely slow down the cycle and lead to a longer wait time for your money.
However, an even simpler way to speed up the process is utilizing the services of an alternative lender. Alternative lenders require much less paperwork than traditional lenders and often have higher approval rates.
Similar to a direct lender, alternative lenders cut down on the time it takes to provide money to borrowers. Most applications are straightforward and can be completed easily online. Unlike traditional business loans, the alternative business loan approval process is streamlined for quick approval and funding. For business owners who need funding quickly, borrowing from an alternative lender can make all the difference.