Why Does It Take So Long to Close a Bank Loan?

Most borrowers will say the process is too complicated and customer service is deficient.  I don’t agree.


I have served as an intermediary between borrower and lender for many decades.

I have always represented the borrowers, business owners and real estate developers, mainly in the debt market.  I know the requirements are stringent. They should be. If you are a first time business borrower and the lender is going to provide a loan to a business that may or may not have collateral to support the loan, the lender wants to know about the history of the business and the potential for growth.

There is a great deal of information needed to satisfy the underwriters, the loan committee and the regulators.  If that information is provided in a timely organized fashion, a loan can be closed very quickly.

Of course you should work with an experienced loan officer who is customer oriented.

Small business owners whose businesses are expanding need the working capital for their growth.

Satisfying the requirements of a bank is a temporary, full time job.

If it is done efficiently a working capital loan can close and be funded in less than two weeks. I make this statement based on first-hand experience. It takes a bit longer for a term loan and an SBA guaranteed loan, but the process can be streamlined if the borrower collects the required documents and submits a complete package.

Many of the delays in processing the loan request are due to the borrower’s inexperience in working in the debt market.

Personal credit report from one of the three credit agencies

I recommend you request a current personal credit report from one of the three credit agencies – Equifax, TransUnion and Experian prior to contacting a lender. If you are seeking a loan with the best market interest rate and you have an established business with tax returns, you will need a personal credit score of 680 or higher.

Otherwise you will have to seek alternative lending at higher rates. All owners of the company with a 20% or more ownership will be required to guarantee the loan.

I have not defined the number of years that a company must be in business to qualify for a loan, because this can vary with the type of loan, the size of the loan request and the relationship with the specific lender.

Your first appointment should be with the banker who currently handles the business accounts for your company.

Next- You will always need to provide the follow information