SBA Loan Delays: Why Business Acquisitions Are Taking Up to Six Months to Close

Written by:

Rudi Davis

Date:

24 Feb 2026

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A fragmented underwriting system creates persistent delays as regional processing centers struggle with national deal volume.

The Small Business Administration (SBA) loan process is contributing to delays in business acquisitions, with closing times often stretching four to five times longer than the 45-day timelines some banks advertise. Kerrian Latty, a Realtor and business broker at Better Homes and Gardens Real Estate Gaetano Marra Homes, says banks often promise 45-day underwriting periods, but closings can take six months or longer.

“They’ll say 45 days, but I’ve never seen the SBA close that fast,” Latty says.

These delays are rooted in the structure of SBA loan processing. Local bank branches take applications and gather documents, but the actual underwriting is handled by regional processing centers covering multiple states. This creates a backlog that most borrowers and sellers do not anticipate when entering purchase agreements.

Why SBA Underwriting Can Slow Closings

Latty outlines a typical process: A buyer visits a large bank, such as Citibank, to finance a business purchase. The local banker collects financial statements, tax returns, and other documents, but then sends the package to an out-of-state underwriting facility that manages SBA loans for the entire region.

“You’ll go in there saying you want to buy this business, and the business broker will turn you over to someone else,” Latty explains. “That person collects everything, but then they have to send it to another company in Georgia that really does the underwriting.”

As a result, a single underwriter in Georgia may handle loan applications from multiple New England states. Because only a limited number of SBA-approved lenders operate nationwide, business buyers compete for limited underwriting capacity. The system is under constant pressure, resulting in extended wait times.

Latty says this gap between advertised and actual timelines creates major issues for sellers who accept SBA-financed offers. She warns clients, “When you’re accepting an SBA offer, this could take up to a year to close.”

Additional Factors That Extend Closing Timelines

Business acquisitions face other delays that do not affect residential real estate. For example, securing business insurance can take 30 days, compared to 24 hours for a homeowner’s policy. Even after approval, insurers often set effective dates weeks in the future, meaning closings cannot occur until coverage begins.

“Even if you agree on price and want it to go into effect, they’ll still say, okay, it starts March 1, so you can’t close all of February,” Latty says.

These additional steps lengthen the underwriting timeline and further delay closings. For sellers seeking quick liquidity and buyers leaving jobs to take over a business, the extended process can create financial stress and uncertainty.

The process differs significantly from residential real estate transactions. Mortgage underwriting for homes typically takes 30 to 45 days. Lenders have strong incentives to meet those deadlines. In business acquisitions, competitive pressure to accelerate processing is lower. Delays are more common.

Private Equity and Alternative Lenders

Since the COVID-19 pandemic, Latty has seen more private equity groups and non-SBA lenders enter the market. These alternatives often close deals faster than SBA loans, though their terms or costs may differ.

“Since COVID, I’ve seen other companies and private equity groups come forward to finance business deals,” Latty notes.

Despite these options, SBA loans remain the primary financing tool for most buyers, especially for purchases under $5 million. The SBA’s loan guarantee program reduces lender risk and allows buyers to make acquisitions with lower down payments than conventional loans.

Looking Ahead: Pressure to Improve Processing Times

The SBA’s structural benefits, such as lower down payments and government-backed guarantees, keep it central to the business acquisition market. However, as more buyers encounter six-month closing timelines and alternatives become more accessible, the SBA faces growing pressure to speed up its underwriting process.

If the agency does not address these operational inefficiencies, it risks losing market share to faster-moving private equity firms and non-SBA lenders. For now, buyers and sellers must plan for extended timelines and build flexibility into their transactions, knowing that the path to closing with an SBA loan is far longer and less predictable than most expect.