Application Approval / When can I get the money?

Middle America Region
Brian Climer and Debbie Climer
4620 Woodcrest Dr.
Columbus, IN 47203
Tel (812) 390-7988 Fax (812) 372-7882

West Coast Region - Home Office
Located in the Heart of California
Wayne Evans
10225 Morro Road
Atascadero, CA 93422
Tel (805) 460-9111 * (800) 540-4884
Fax (805) 460-9119

East Coast Region
C. Nicholas Costa
455 Laurel Street
Scranton, PA 18508
Tel (800) 540-4884 Fax (570) 347-8775

A brief view of the typical loan approval thought process.
When banks, and other lenders, look at a business loan request,
there are three items that stand out the most.

1. Historic Cash Flow:	Usually 1.25:1 debt coverage ratio minimum. (See ratio definitions below)
2. Management Expertise:	Banks need to feel comfortable with the borrowers ability to successfully operate the business. The management resume should reflect this.
3. Collateral:	Collateral requirements vary with every lender. (Reasonable collateral based on risk should apply.)

If you have met the above requirements, your loan has a high probability of being approved. You need to start negotiating rates and terms.

There are, of course, many other factors that the bank must consider before a commitment letter could be issued.
Other factors that stand out are:

1. Cash Injection:	How much money does the borrower have at risk? Start-up businesses usually require at least a 1/3 cash injection of the total project costs.
2. Detailed Business Plan:	Start-up businesses always require a business plan and income and expense projections for the first three years of operation. The validity of the projections is based on the research and documentation supporting the projections. Management expertise in the field is very important.
3. Additional Collateral:	Collateral may replace weaknesses elsewhere.
4. Ratios:	Banks love ratios -( See Ratios Definitions in Financial Glossary).
5. Credit:	Good credit always helps - Credit issues will most often require and explanation. Different banks have different levels of tolerance when it comes to credit issues.
6. Personal Financial Statement:	List of personal assets and personal liabilities. Do not include debt paid by your business. Include other sources of personal income.

Banks advertise 24 and 48 hour approval. That’s 24 hour approval after the bank receives sufficient documentation** that enables the bank to issue a pre-commitment letter. (Also known as an Expression of Interest letter) "When can I get the money?" The funding process can be 2 weeks to 8 weeks. The level of expertise that the lender has in processing SBA loans, or any loan for that matter, usually determines how long it takes before the loan funds. The complexity of the loan and the loan amount can add to the delay. The SBA has special programs for smaller, faster loan processing. (See the MicroLoan Program)

Real-estate loans take longer due to possible additional requirements such as: commercial appraisals (commercial appraisals can take 2 to 4 weeks) and environmental reports. The type of real estate financing can also add to the funding delays.

An experienced loan officer could predict a loan approval in a 5 to 10 minute conversation with a borrower. Conditional loan approval can be obtained with in hours of submission of a well-presented loan request. It’s the "documentation process" that causes the funding delays.

The following is a table of estimated processing times for various types of loans:

Loan Type	Processing Time
1. SBA 7a Loan, "Preferred Lender"	30 to 60 days
2. SBA 504 / Real-Estate purchase	60 to 150 days
3. Bank / Savings & Loan	30 to 90 days
4. Conduit (Insurance company, etc. )	60 to 120 days
5. Alternative Financing	30 to 90 days
6. Bank Line of Credit	15 to 45 days
7. Residential Real-Estate financing	10 to 30 days
8. Export Line of Credit	30 to 60 days

A complete, well presented loan application, to a proficient lender, familiar with your type of business, is the best time saver. All loans vary in size and complexity, all banks and lenders vary in expertise, all banks vary in likes and dislikes. We cannot guarantee funding times. We provide only a general estimate of processing times.

**Sufficient Documentation can vary from lender to lender. Usually requires at least two years business tax returns, current business and personal financial statements. Amount requested and how the money will be spent.