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How to Get a Business Loan

Many small business owners will experience the need of accessing capital at some point during their business lifecycle.  Whether a business needs extra funding to start operations, grow the business or expand, a business loan can help solve a variety of problems for owners.  Despite institutions like the Small Business Administration (SBA) helping business owners get better access to capital, getting a small business loan can be a complicated endeavor.  There are a number of different types of business loans available, each with its own set of terms and conditions. The process of getting a business loan can also be daunting, but it is essential for small businesses that need funding to grow and expand.

Here are some important steps for small business owners to consider ahead of getting a loan for their business:

  1. Define Your Business Needs: As the business owner, you have the pulse to decide when and where capital is needed to enhance your business.  Common business needs that may require a business loan include purchasing property, working capital, business expansion, and more.
  2. Dust Off or Create a Business Plan:  A business plan is a document that helps outline your business goals, strategies, and how you plan to achieve them. It’s an important document the lender will use to help assess the lending risk. We go in-depth on how to create a business plan, here.
  3. Research Small Business Loans:  Before you start applying for business loans, it is important to do your research and understand your options. There are a number of different types of business loans available, each with its own set of terms and conditions.
  4. Research Business Lenders: Nowadays, businesses can access capital from a number of different venues, including banks, online & microlenders, and more. It’s important to shop around during this process to ensure you are getting the best lending fit for your business. Lendio is an example of a small business lending marketplace that does some of that shopping for business owners by connecting to over 75 lenders in their marketplace based on the likelihood of a lending match.
  5. Aggregate Financial Documents: During the lending process, the lender will ask for visibility into the financials of your business. These may vary, but generally include tax returns, bank statements, and business credit reports.
  6. Apply for a Loan: Once you have submitted your loan application, the lender will review it and decide whether or not to approve your loan. The lender will consider a number of factors, including your business plan, your financial documents, and your credit score.

Getting a business loan can be a complex process, but it is essential for small businesses that need funding to grow and expand. By following the steps outlined in this article, you can increase your chances of getting approved for a business loan.

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