How long does a business loan take?

An unsecured cashflow lender can answer within a day. A property-secured private lender can give an indicative answer on the first call and fund in as little as 24 hours from a clean, complete scenario. A bank typically takes three to eight weeks, most of which is the valuation and the analysis rather than the decision.

Realistic timeframes

The gap between the first two columns is worth noticing. Getting an answer is fast almost everywhere; getting money is where the timetables diverge, and the difference is made up almost entirely of valuation, documentation and other people's processes.

Where a bank's weeks actually go

• The valuation. Ordering a sworn valuation, waiting for a valuer, and waiting for the report. A week or two for residential, longer for commercial and longer again outside a capital city. This is usually the single largest block of time.
• The financial analysis. Two years of accounts, interim figures, an ATO position and a serviceability model. Careful work, and not fast.
• The credit process. A file passing through several people, each with a queue.
• Documentation and settlement. Preparing and issuing documents, then booking settlement with everybody's solicitors.

The decision itself is often made in a day once the file is complete. The weeks are the assembly, which is why removing the valuation and the financial analysis changes the timetable so dramatically rather than marginally.

The four things that make a file fast

1. 1
   A documented exit.A contract of sale, an approved refinance, a certified claim, a named debtor with terms. An intention is not an exit, and it is the most common reason a file stops moving.
2. 2
   Accurate figures for what is already owed.A surprise on the title — a balance larger than stated, a caveat, a writ, rates arrears — costs a day at best.
3. 3
   Everyone on the title available to sign.A co-owner overseas, unwell, or simply not yet told is the single most common reason a 24-hour file becomes a 72-hour one. Say so at the start and it can be planned around.
4. 4
   The deadline, stated on the first call.Nobody can make a lawyer answer the phone, but knowing the date means nothing waits on us.

The one thing outside anybody's control

If the security is a registered second mortgage, your existing lender's consent is usually required, and most Australian banks take a week or two to issue it. That is not a HomeSec timetable, a broker timetable or anything that can be escalated — it is a queue in someone else's operations centre.

It is also why a caveat exists as an alternative. A caveat needs nobody's consent, which is frequently the difference between funding before a settlement date and funding after it. The trade is price: a caveat sits in a weaker position on title and is priced accordingly, so where the date allows time for consent, the second mortgage is usually the better loan. The difference between the two, in full.

Getting an answer today

An indicative answer takes one phone call and seven details, none of which is a document: what the property is roughly worth, its address, what is owed on it and to whom, how much you want, how long for, how many people are on the title, and what the money is for. Conditional approval then takes about fifteen minutes and three documents. Settlement follows in as little as 24 hours from a clean, complete scenario.

Reviewed by Jason Brockmuller, Joint Chief Executive