How Long Does It Take To Get a Business Loan?

Once you’ve decided you need a business loan, you shouldn't have to wait long to get it. Unfortunately, lenders don’t always share the same urgency, so it’s essential to understand the various lending processes and have lenders lined up when you need working capital.

How Does a Business Loan Application Work?
A loan application typically involves three key steps:

1. Applying
   The application process is primarily your responsibility. First, you fill out an application and submit the required documents. This may be followed by a series of calls or emails. Traditional lenders often require extensive paperwork to assess their risk, while others may be more flexible and use different methods to safeguard their investment in you.
2. Underwriting
   Once everything has been submitted, the lender will conduct due diligence to determine if they can grant you the loan, which will also inform the interest rate they set. In some cases, this underwriting process can occur automatically, while in others, it may take several days, depending on the funder, their backend processes, and policies.
3. Funding
   Once your loan has been approved, the lender will deposit the funds into your account. The speed of this process varies based on the lender, their systems, and policies, ranging from 24 hours to several months.

What Are Some Different Types of Funding?

• Traditional Lenders: Traditional lenders, like banks, review a substantial amount of paperwork before extending a business loan. Required documents include income statements, balance sheets, financial statements, tax returns, a business plan, company registration, proof of business address, shareholder agreements, and loan application forms. All this information must be thoroughly reviewed before approval.
• Business Refinancing: Refinancing involves taking out a new loan to pay off an existing one. This new loan may have different terms, such as a lower interest rate, a different repayment schedule, or a different loan amount. Refinancing can be an effective way to secure better terms or access additional capital for growth, but it’s crucial to understand the risks and implications involved.
• Asset Finance: This type of financing uses borrowed money secured against an asset. Business owners often use asset-based banking to purchase vehicles, tools, and equipment. Asset-based finance can cover various needs, including asset acquisition, operating capital, and growth.
• Invoice Financing: Invoice financing allows businesses to sell their outstanding invoices to a lender in exchange for immediate cash. This option can be beneficial for businesses with customers who take a long time to pay their invoices.
• Peer-to-Peer Lending: In peer-to-peer lending, businesses borrow money from individuals rather than banks or financial institutions. This option may be suitable for businesses with good credit scores, although it could be more expensive than traditional loans.
• Unsecured Loans: To obtain an unsecured business loan, maintaining a healthy credit rating is essential. Lenders prioritize a business's financial history over its age or profitability. However, offering personal assets as collateral can deter some business owners from this option.

The Merchant Capital Solution
Applying for a Merchant Cash Advance takes just a few minutes if you have your documentation ready. Our Cash Advance product provides a quicker working capital solution than traditional channels, offering funding in as little as 48 hours. We require less documentation, provide flexible terms, and ensure a tailored payment plan aligned with your business’s turnover. The cash advance is unsecured, meaning you won’t need to pledge assets or offer equity.

To qualify for a Merchant Cash Advance, your business must have been operational for over 12 months, have at least one South African director, possess a valid lease agreement, and generate an average monthly turnover of R50,000. If eligible, our application process is quick. We will conduct personal and business credit checks, process your documentation, and contact any references to better understand your business circumstances. Simply upload a few key documents, and you could receive your cash in as little as 48 hours.

The Bottom Line
When seeking a business loan, it’s best to plan ahead and understand all available options for quick access to working capital when you need it most. Keep in mind that your funding timeline will depend on the lender you choose and the type of loan you’re pursuing. Be prepared and familiar with the options and processes available to you. For more information on how to fund your business within the next 48 hours, contact Merchant Capital today.