The SBA 7(a) Loan Timeline: What Sellers Need to Know from LOI to Close
- Mark Hartmann
- 4 days ago
- 5 min read
First, a Quick Primer: What Is the SBA 7(a) Loan?
The SBA 7(a) loan program is the most widely utilized financing option for small business acquisitions in the U.S. It allows qualified buyers to borrow up to $5 million with 10-year repayment terms and relatively low interest rates. What makes it attractive for buyers is the low down payment requirement (typically just 10%) and the ability to finance not only hard assets like equipment but also goodwill, working capital, and more.
What does that mean for sellers? More buyers, higher offers, and better odds of closing.
SBA financing often provides an opportunity for financially capable buyers who may not have $2 million in cash readily available to purchase your business outright. With the SBA program, they can maximize their resources, allowing you to achieve a clean sale and full price at closing.
So, How Long Does It Take?
The standard SBA timeline runs 60 to 90 days from Letter of Intent (LOI) to closing.
Could it go faster? Sure—especially if you’re working with an experienced buyer, a top-tier SBA lender, and a rockstar deal team.
Could it take longer? Absolutely. If the financials need cleanup, the buyer drags their feet, or the lender runs into bottlenecks, it’s not unusual for deals to stretch out beyond 90 days.
Let’s break down what happens during each phase so you know what to expect—and what you can do to keep things moving.
Phase 1: From LOI to Full Lender Submission (1–3 Weeks)
The deal enters diligence mode once you’ve accepted a buyer’s LOI. The buyer selects an SBA lender (hopefully one specializing in business acquisitions), and both sides start compiling documents.
Here’s what happens during this phase:
- The buyer submits their SBA loan application.
- The seller provides an extensive list of documents, including:
- Three years of tax returns
- Profit and loss statements
- Balance sheets
- Lease agreements
- Key contracts and licenses
- The lender starts building the loan package.
✅ Seller Tip: Preparation Speeds Things Up
Want to keep your deal on schedule? Prepare your documents before the LOI is signed. At HartmannRhodes, we collaborate with sellers early to create a clean, complete diligence package that’s ready to hand over the moment a buyer shows interest. This approach saves you weeks and builds instant trust with lenders.
Phase 2: Lender Underwriting (2–3 Weeks)
Once the loan package is submitted, the lender goes into underwriting. This is where they review both the buyer (their financial strength, experience, creditworthiness, etc.) and the business (profitability, stability, future prospects, etc.).
In this phase, the lender may:
- Request clarifications or updated statements.
- Conduct interviews with the buyer.
- Order third-party reports, such as:
- Business valuation
- Real estate appraisal (if applicable)
- Environmental reports. - Review the buyer’s business plan and projections.
✅ Seller Tip: Think Like a Lender
The cleaner your financials are, the less they’ll ask. That means accrual-based accounting, consistent categorization, and up-to-date numbers. If there are any unusual expenses or trends, be ready to explain them.
Phase 3: SBA Review and Loan Commitment (1–2 Weeks)
Here’s where the type of lender you choose really matters.
If the buyer is collaborating with a Preferred Lending Partner (PLP)—an SBA-approved lender capable of approving loans in-house—the loan can be approved and committed within a few days.
If not, the lender must submit the loan to the SBA for additional review, which can take 1–2 weeks.
Once the loan is approved, the SBA assigns a loan number and issues a commitment letter saying: “This deal is a go.”
✅ Seller Tip: Help the Buyer Choose the Right Lender
Not all SBA lenders are created equal. Some are lightning-fast. Others drag deals through the mud.
At HartmannRhodes, we only work with lenders specializing in business acquisitions, communicating clearly, and moving quickly. That means your deal gets the attention it deserves—and gets to the finish line faster.
Phase 4: Closing and Funding (2–4 Weeks)
Now it’s time for the home stretch: the closing process.
During this phase, the lender’s closing department works with the buyer’s attorney, your broker, and any third parties to finalize the deal. This includes:
- Drafting and signing the purchase agreement
- Assigning the lease (or signing a new one)
- Performing lien and UCC searches
- Getting required licenses transferred
- Finalizing the buyer’s equity injection
- Funding the escrow account
- Closing the transaction
✅ Seller Tip: Stay Engaged Until the End
It’s tempting to mentally check out at this stage, but your responsiveness can make or break the deal. Answer questions promptly, review documents quickly, and remain flexible if minor changes arise.
Common SBA Deal Delays—and How to Avoid Them
Here are some of the most common hang-ups and how you can avoid them:
- Disorganized or inaccurate financials → Organize them before going to market.
- Delayed lease assignments → Communicate with your landlord early.
- Licensing or permits not transferable → Verify transferability upfront.
- Unprepared or inexperienced buyer → Collaborate with a broker who prequalifies buyers.
- Working with the wrong lender → Select a lender who specializes in business acquisitions.
Why SBA Deals Are Worth the Wait
Yes, SBA deals take time. And yes, they require documentation, patience, and persistence.
But here’s why they’re worth it for sellers:
- More buyer demand
- Higher purchase prices
- All-cash closings
- Fewer post-sale obligations
In many cases, SBA-backed deals are the only realistic path to a successful exit—especially for businesses in the $1M to $5M value range.
Final Thoughts: Timing Is Everything—But So Is Preparation
If you plan to sell your business, and SBA financing is likely in the mix, start preparing now.
That means:
- Cleaning up your books
- Organizing your documentation
- Talking to a knowledgeable M&A advisor (that’s us)
- Understanding the timeline—and working backward from your ideal exit date
With the proper preparation and the right team, SBA financing doesn’t have to be painful. It can be a powerful tool to help you exit on your terms—and walk away with everything you’ve earned.
Ready to Sell? Let's Talk SBA Strategy.
Are you considering selling your business in the next 6–18 months? Let’s build your plan now—so you’re not scrambling when a great buyer appears.
We’ll walk you through the SBA process, help you get your house in order, and connect you with serious and ready buyers—and qualified—to close.
Mark Hartmann is a former business owner turned M&A advisor who knows firsthand what it takes to build, grow, and sell a successful company. A three-time Inc. 5000 CEO, Mark did just that before navigating its eight-figure sale—giving him a rare perspective that sets him apart from most brokers. Today, he helps owners of companies valued between $1M and $25M plan and execute smooth, profitable exits.
Mark understands that selling a business isn’t just a financial decision—it’s personal. That’s why he works closely with owners to protect their legacy, maximize value, and make the transition on their terms. He holds an MBA from Eastern University, a Master’s Degree in Organizational Change Management from St. Elizabeth University, and a Graduate Certificate in Executive Coaching from Columbia University. Some of his professional credentials include Certified Mergers & Acquisitions Professional (CM&AP), Certified Business Intermediary (CBI), Certified Exit Planning Advisor (CEPA), and Certified Value Builder (CVB).
44 Washington Street, Unit #1080
Morristown, NJ 07960
Partner with HartmannRhodes, expert business brokers and M&A advisors, to strategically navigate your business sale—maximizing value and ensuring a smooth transition. Reach out for tailored business sale strategies. Contact us today!
The SBA 7(a) Loan Timeline: What Sellers Need to Know from LOI to Close
