How to Cancel an SBA Loan Application

Running and financing a business is not as easy as it seems. If you’re a small business owner, the chances are you need financing to aid your business. And one of the ways to get this finance is via a loan. Many business owners apply for small business loans due to the declining cashflow or an urgent need for more working capital.

However, SBA loans are not suitable for business owners who need cash almost immediately in most cases. The whole SBA loan process takes about 60 – 90 days to finalize. Unlike other small business loans and alternative financing products, cancelling an SBA loan due to the high volume of paperwork and documentation required of you can take awhile.

Luckily, there are some steps you can take that can ease and speed up the SBA loan process. This article will walk you through applying for an SBA loan to completion, the payoffs, and long-term loan with manageable payment plans. We will be explaining in detail how long it can take to cancel an SBA loan application.

Guideline to the SBA Loans Application Process

Small business administration (SBA) loans are guaranteed business loans for small businesses. Though several SBA funding programs are available, the government agency provides SBA loan guarantees about 85% of the loan amount issued via SBA- approved lender. The three major SBA loan programs allow you to borrow money for almost any business purpose via these SBA-guaranteed loans.

The SBA is a federal agency dedicated to aiding entrepreneurs to improve and grow their businesses. With this support, business owners can leverage contract opportunities and have access to conventional small business loans.

The SBA utilizes federal money to give a percentage of loans issued by traditional banks. This move is to aid the financial institutions to have more incentive to lend money to small businesses.

Available SBA Loans

There are currently three major types of SBA loans available for small business owners depending on the amount and purpose of lending. The three types include:

  • SBA 7(a) loans

    The SBA 7(a) loans are general-purpose loans of about $5 million. This loan comes with a 10-year repayment term.

  • CDC/504 loans

    CDC/504 loans are geared toward the purchase of real estate and equipment. It has a loan repayment term of 25 years.

  • SBA microloans

    Small business owners have access to up to $50,000, with a six-year max repayment period on SBA microloans.

Only the most qualified applicants get approval for SBA loans. To aid your application, you must provide the lender with details on your company and yourself. Your lender must deem you and your business worthy of the loan with backings. Having clear profit and loss statements, a business plan and a full personal credit will boost your chances of getting approval.

SBA Loan Process

The SBA loan process can be quite confusing and navigate for first-time borrowers. Some business owners have been discouraged due to the rigorous application process. Below is a highlight of the application process and how long each stage takes:

  • Application for a loan – borrower is required to gather all documentation. This process takes 1-30 days to complete.
  • The lender underwrites the loan. Usually, it takes about 10-14 days to finalize.
  • The lender approves the loan and sends a commitment letter. This takes another 10-21 days.
  • The lender closes on the loan. This process takes 7 – 14 days.

The above is a summarized step on how to apply for an SBA loan. It is crucial to be in constant communication with our lender all through the process. Your lender will immediately communicate with you if there are any issues along the way and proffer the best solution.

Duration for Processing an SBA Loan

Generally, it takes about 60 – 90 days, depending on your lender and amount, to finalize an SBA loan process. The more significant the amount, the longer the term, and the stiffer the lender will review your application.

Also, the experience of your lender plays a role in the duration of processing your loan. Lenders in the SBA’s Preferred Lender Program have the right over underwriting and credit checks without SBA review. At the same time, lenders with less experience take a more active role, which in the end, lengthens the process.

Since the first thing your lender will require is paperwork, putting together the required documents might lengthen your application’s duration even before applying. In some cases, it can take weeks for a business owner to put together the appropriate paperwork.

Required Documents for an SBA Loan Application

Below are some of the most crucial documents required of an SBA Loan applicant:

  • Personal background statement; includes previous address, names, criminal record, educational background, etc.
  • Resume – this includes yours and that of any business partners and co-owners you may have.
  • A Business loan proposal or request letter.
  • Purpose of loan detail – a detailed overview of what you intend to do with the loan.
  • Size of business and age.
  • Personal credit report – this includes yours and that of any business partners and co-owners you may have.
  • Business credit report – this is for people who are in business already
  • A business plan –must include financial projection and goals for the company.
  • Personal and business income tax return for the last two-three years.
  • Financial statement, P&L statement, balance sheets, and debt schedules, if any, for the last two-three years.
  • Collateral – if applicable.
  • Legal documents; include a business license, articles of incorporation, contracts with vendors or suppliers, leases for commercial vehicles, real estate, franchise agreements, etc.

The above is just a summary of the paperwork required of a borrower. Be ready to provide more paperwork when needed. This is why the gathering of paperwork takes a more extended period for some small business owners.

Luckily, some of the required documents like credit reports, don’t have to come directly from you. The lender can get your credit reports based on your personal and business details.

After submitting the paperwork, you’ll need to fill out the necessary application forms required by the lender and the SBA. Generally, the SBA requires all 7(a) loan applicants to fill out the SBA Form 1919, SBA Form 413, and SBA Form 912.

To fill out these forms, you’ll need detailed financial and legal information; this can take a few days to finalize. To aid your application, you can contact your business lawyer or accountant or bak for help.

How to Cancel the SBA Loan Application

If you don’t want to proceed with your SBA application again, you can cancel it. To cancel your loan application, contact your lender/customer support as soon as possible.

If your loan has been funded, you have a window of five days to cancel it. Ensure that all the funds received are in your account before proceeding to cancel, as your lender will attempt to withdraw it within 5-7 business days.

If you’ve not received the full amount after 30 days before you apply for cancellation, you’ll be required to repay the loan, any fees and interest. Cancelling a loan does not affect your credit score as there are no details your lender has to report to the credit bureau.

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