How Long Does It Take to Get a Business Loan?

If your business needs funding, one of the first questions is often how quickly can the money be available?

The answer can range from the same day to several weeks, depending on the type of business loan, the lender, the complexity of the application and whether security is required.

For a relatively straightforward unsecured business loan, a decision can sometimes be made within hours and funding may be possible shortly afterwards. More complex or secured transactions will usually take longer.

Understanding what happens during the application process, and what commonly causes delays, can help you get funding more quickly.

How quickly can an unsecured business loan be approved?

Unsecured business lending can be relatively quick because the lender doesn't normally need to value an asset or complete the legal work associated with taking security over property.

For a straightforward application where all the necessary information is available, some lenders can provide an initial decision or indicative offer on the same business day.

Completion can then potentially take place quickly once any outstanding checks, documentation and loan agreements have been completed.

However, speed varies considerably between lenders.

A quick decision is also much easier where the application is straightforward and the lender receives everything it needs at the outset.

Can I get a business loan on the same day?

Potentially.

Same-day business funding is possible in some circumstances, particularly for straightforward unsecured applications.

For that to happen, several things normally need to align:

• the application is made early enough in the day;

• all required information is available;

• bank information can be accessed quickly;

• credit and identity checks are satisfactory;

• there are no material issues requiring further explanation;

• any personal guarantee requirements can be completed promptly; and

• the loan documentation is signed quickly.

Same-day funding should therefore be viewed as possible rather than guaranteed.

If a lender needs additional information or clarification, the process will naturally take longer.

What happens after I submit a business loan application?

Although lenders have different processes, an application will generally pass through several stages.

1. Initial application

You provide basic information about the business, including how much you want to borrow and the purpose of the funding.

The lender may also ask about turnover, trading history and existing borrowing.

2. Financial information

The lender obtains the information it needs to assess the company's financial position.

This might include business bank statements or open banking data, filed accounts and, where necessary, management accounts.

3. Credit assessment

Credit searches may be carried out on the company and, depending on the facility, directors or proposed guarantors.

The lender then considers the application against its lending criteria.

4. Underwriting

The lender assesses whether it is comfortable providing the loan and, if so, determines an appropriate amount, term and price.

Some applications can be assessed largely automatically. Others require manual underwriting.

5. Offer and documentation

If approved, the lender issues the proposed terms and the required loan documentation.

6. Completion and funding

Once the necessary documents, identity checks and any other completion requirements have been satisfied, the loan can be completed and the funds released.

What can slow down a business loan application?

One of the biggest causes of delay is missing information.

An application that initially looks straightforward can take considerably longer if the lender repeatedly needs to request additional information.

Common causes of delays include:

• missing bank statements;

• incomplete details of existing borrowing;

• outdated financial information;

• unexplained adverse credit;

• difficulty verifying directors or guarantors;

• significant transactions requiring explanation;

• recent changes in ownership;

• discrepancies between the application and information obtained elsewhere; and

• delays signing documentation.

Providing complete and accurate information at the beginning can therefore make a significant difference.

Does open banking make getting a business loan quicker?

It can.

Traditionally, applicants might have needed to download several months of PDF bank statements and send them to the lender.

Open banking allows a business to authorise secure access to relevant account information electronically.

This can make it easier for a lender to analyse recent turnover, balances, existing finance payments and other cash-flow information.

It can also reduce delays caused by missing pages or outdated statements.

Open banking doesn't guarantee approval, but it can make the information-gathering and underwriting process more efficient.

Do company accounts slow the process down?

Usually not if the relevant accounts are already filed at Companies House.

For limited companies, a lender can generally access filed accounts directly.

However, further information may be required where those accounts don't provide an adequate picture of current trading.

For example, if the most recent accounts show turnover of £500,000 but the business says it is now generating £1 million annually, the lender may ask for management accounts or other evidence of the increase.

Similarly, if the latest accounts show a substantial loss, but the company says it has subsequently returned to profitability, more recent financial information can help demonstrate that improvement.

The more the lender needs to investigate, the longer the process is likely to take.

Does bad credit make a business loan application take longer?

It can.

A CCJ, historic default or other adverse credit doesn't necessarily prevent a business from obtaining finance.

However, the lender may need to understand what happened.

For example, it may want to know:

• when the issue occurred;

• how much was involved;

• whether it has been satisfied;

• what caused it; and

• whether there have been further problems since.

Providing that explanation with the application can be quicker than waiting for the lender to identify the issue during its credit assessment and then request further information.

How long does a secured business loan take?

Secured lending will generally take longer than a straightforward unsecured loan.

Where property is being taken as security, additional steps can include:

• confirming ownership;

• establishing existing mortgage balances;

• obtaining a valuation;

• carrying out legal due diligence;

• preparing security documentation; and

• registering the lender's security.

Depending on the transaction, solicitors and valuers may therefore become involved.

A secured facility could take several days to several weeks to complete, depending on its complexity.

If funding is required urgently, this difference in completion time can be an important consideration when deciding between secured and unsecured borrowing.

Does a larger business loan take longer?

Not automatically, but larger facilities can require more detailed underwriting.

A lender considering a relatively small loan may be able to make a decision using bank information, credit data and filed accounts.

For a significantly larger facility, it may want additional information such as:

• recent management accounts;

• detailed information about existing borrowing;

• cash-flow forecasts;

• customer or supplier information; or

• further explanation of the purpose of the loan.

The amount of due diligence should generally increase with the lender's exposure and the complexity of the transaction.

How can I get a business loan more quickly?

If speed matters, preparation can make a substantial difference.

Before applying, make sure you can clearly explain:

How much you need. Have a specific funding requirement rather than simply asking for the maximum available.

What the money is for. A clear commercial purpose makes the application easier to understand.

What finance you already have. Know your existing lenders, approximate balances and repayments.

What has happened recently. If turnover has increased or decreased materially, be ready to explain why.

Any potential credit issues. If there is something a lender is likely to discover, providing the context early can save time later.

And where the lender offers open banking or electronic identity verification, completing these steps promptly can help keep the application moving.

Is the fastest business loan always the best option?

Not necessarily.

Speed can be important, particularly where a business has an immediate opportunity or short-term funding requirement.

But it shouldn't be the only consideration.

You should also consider:

• the amount being offered;

• repayment term;

• repayment frequency;

• overall cost;

• security requirements;

• personal guarantees; and

• early repayment provisions.

Receiving £50,000 tomorrow isn't particularly helpful if the repayment structure is unsuitable for the business.

The objective should be to find finance that meets the funding requirement and has a repayment structure the business can support.

Applying for business finance with Adelpha Capital

Adelpha Capital provides business finance to established UK SMEs.

For straightforward applications, we aim to assess funding requests quickly while still carrying out the underwriting and due diligence required to make an informed lending decision.

Providing complete information at the outset, particularly current banking information and latest prepared financials, can help us assess an application more efficiently.

If you're looking for business finance, you can apply online or contact the Adelpha Capital team to discuss your requirements.