What Happens After You're Approved for a Business Loan

Congratulations, you are approved. But approval is not the finish line. There are several steps between approval and having funds in your account. Understanding this process helps you move quickly and avoid delays.

Here is exactly what happens after you receive that approval notification.

The Approval-to-Funding Timeline

Time between approval and funding varies by loan type:

Loan Type	Typical Timeline	What Causes Delays
MCA	Same day - 2 days	Bank verification
Online term loan	1-3 days	Final document collection
Line of credit	3-7 days	Credit line setup, card issuance
Equipment loan	3-14 days	Equipment delivery verification
Bank term loan	5-14 days	Legal documentation, title work
SBA 7(a)	7-21 days	SBA authorization, closing package
SBA 504	14-30 days	Three-party closing coordination

Step 1: Review Your Approval Terms

Your approval letter or commitment letter outlines the loan terms. Review carefully:

Loan amount: Confirm it matches your request (may be lower)
Interest rate: Fixed or variable, and the specific rate
Term length: Repayment period
Payment amount and frequency: Monthly, weekly, or daily
Fees: Origination, closing costs, other charges
Collateral requirements: What assets secure the loan
Personal guarantee: Who must guarantee
Conditions: Requirements before closing

Ask Questions Now

If anything in your approval terms is unclear or different from what you expected, ask before proceeding. It is much harder to change terms after closing.

Step 2: Satisfy Closing Conditions

Most approvals come with conditions that must be met before closing:

Insurance requirements: Obtain required coverage (general liability, property, etc.)
Collateral documentation: Titles, appraisals, equipment invoices
Legal entity verification: Certificate of good standing, operating agreement
Financial verification: Final bank statements, updated financials
Landlord waivers: If inventory or fixtures are collateral
UCC search clearance: Resolve any conflicting liens

Step 3: Insurance Requirements

Lenders typically require proof of insurance:

General liability: $1M per occurrence is standard minimum
Property insurance: If real estate or equipment is collateral
Business interruption: Sometimes required for larger loans
Key person: May be required for owner-dependent businesses
Lender as additional insured or loss payee: Standard requirement

Contact your insurance agent immediately after approval. Getting proper coverage and certificates takes time. Do not let insurance delay your closing.

Step 4: Document Signing

You will sign various legal documents:

Loan agreement: Master document governing the loan relationship
Promissory note: Your promise to repay
Security agreement: Grants lender interest in collateral
Personal guarantee: Your personal promise to repay if business cannot
UCC-1 authorization: Allows lender to file financing statement
Corporate resolution: Board authorization for borrowing (corporations)
ACH authorization: Allows automatic payment withdrawal

Signing options:

Electronic signature: Most common for online lenders
In-person closing: Traditional banks, SBA loans
Notarized documents: Required for some collateral types
Title company closing: Real estate transactions

Read Before Signing

Take time to read every document. Ask questions about anything you do not understand. Once signed, you are bound by the terms.

Step 5: Fund Disbursement

After closing, funds are disbursed:

Wire transfer: Fastest option, same-day or next-day
ACH transfer: 1-3 business days
Check: Rare, but some lenders still use them
Direct vendor payment: Equipment loans may pay vendor directly

Verify the receiving account information carefully. Wire fraud targeting business closings is common. If wiring instructions change, verify by phone using a known number.

Step 6: Verify Fund Receipt

Once funds are sent:

Monitor your account: Check for deposit arrival
Verify amount: Confirm net amount matches expected (less fees)
Save documentation: Keep all closing documents in a secure location
Note your first payment date: Mark it on your calendar

What Gets Deducted at Closing

The amount deposited is usually less than the loan amount:

Fee Type	Typical Amount	Notes
Origination fee	0.5-5% of loan amount	May be financed into loan
SBA guarantee fee	0-3.5% for SBA loans	Based on loan size
Closing costs	$500-$2,000	Legal, filing, etc.
Prepaid interest	Days until first payment	Interest from funding to payment date
Escrows	Varies	Insurance, taxes for real estate loans

Equipment Loan Specifics

Equipment financing has a unique process:

Purchase order or invoice: Lender pays vendor directly
Delivery verification: Must confirm equipment received
Inspection period: Time to verify equipment condition
Title transfer: Equipment title transferred with lien noted
Installation: Sometimes funding held until installed

Line of Credit Specifics

Lines of credit activate differently:

Credit line established: Full amount available, not disbursed
Draw instructions: Learn how to request draws
Draw minimums: Some have minimum draw amounts
Interest starts on draws: Only pay interest on what you use
Repayment terms: Understand minimum payments and full repayment requirements

Setting Up for Repayment Success

Prepare for repayment before you receive funds:

Confirm payment date: Know exactly when first payment is due
Set up auto-pay: Most lenders offer automatic withdrawal
Build payment buffer: Have funds available before due date
Calendar reminders: Set alerts before each payment
Save lender contact info: Know who to call with questions

First Payment Timing

First payments are typically due 30 days after funding, but this varies. Some loans have longer grace periods; some (especially MCAs) start immediately. Confirm your specific timeline.

After Funding: Ongoing Requirements

Your obligations do not end at funding:

Financial reporting: Some loans require periodic financial statements
Insurance maintenance: Keep coverage current and provide annual certificates
Covenant compliance: Meet any ratio or performance requirements
Change notifications: Inform lender of ownership, address, or business changes
Annual reviews: Some credit lines require annual review for renewal

Using Funds Properly

Use loan funds for the stated purpose:

Document everything: Keep receipts and invoices for purchases
Match use of funds: Stick to what you described in your application
Avoid restricted uses: No personal expenses, paying other business debts (unless approved)
Maintain records: Lenders may audit use of funds

SBA Use of Funds

SBA loans have strict use-of-funds requirements. Using SBA loan proceeds for unauthorized purposes violates federal regulations and can result in loan acceleration and fraud charges.

Post-Closing Checklist

After closing, complete these items:

[ ] Verify funds received and amount is correct
[ ] Save all closing documents securely
[ ] Note first payment date and set reminder
[ ] Set up auto-pay if available
[ ] Review covenant requirements
[ ] Calendar any reporting deadlines
[ ] Update your debt schedule
[ ] Inform your accountant of new loan
[ ] Begin using funds for approved purpose
[ ] Keep receipts for all fund usage

If Problems Arise

If you encounter issues between approval and funding:

Communicate immediately: Contact your loan officer right away
Be honest: Do not hide problems; they will surface eventually
Provide solutions: Come with ideas, not just problems
Document everything: Keep records of all communications

Common issues that arise and how to handle them:

Insurance delays: Start the process immediately; use temporary binders if needed
Missing documents: Respond same day to any requests
Title issues: Work with title company to resolve; may delay closing
Changed circumstances: Report immediately; hiding changes is worse than disclosing