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Need to Know How to Get a Business Loan? Here’s the Lowdown

How to Get a Business Loan

Sooner or later most small businesses need to know how to get a business loan, whether to get the operating capital for business startup or to finance an expansion. But whether you’re approaching a bank or a friend for a business loan the lender will have the same expectations.

You can greatly increase your chances of successfully securing a loan by being prepared to meet those expectations.

Put yourself on the other side of the desk for a moment. If someone asked you for a small business loan, you’d want to know exactly why he or she wanted the money and what the chances were that he or she would repay the loan in full and on time. So that’s what you have to do.

How to Get a Business Loan? Prepare.

1) Check/establish your credit rating.

Understand that although you’re going after a business loan, your personal financial standing will be scrutinized as well – especially your credit score and your debt to income, which should be no more than 33% of your gross monthly income.

You need to have a good credit rating if you are going to get a business loan from a traditional bank or through a government program. So it’s a good idea to check out your credit report first to find out what your potential lender(s) will see when they look at it.

The credit report you receive will include information on what to do if you find errors in the report. If you have a poor credit rating, you will want to take steps to repair your credit rating before trying to get a business loan.

In the U.S., you can get a free credit report once a year through the website AnnualCreditReport.com. For more information, see How to Get a Free Credit Report.

In Canada, you can get a free credit report by contacting one of the two credit reporting agencies, TransUnion or EquiFax Canada. To receive your free credit report you will need to mail or fax one of these companies a request along with copies of two pieces of I.D. Note that you will not be able to get a free credit report through the website of either company; you will be charged a fee for an online report. CreditKarma provides free online credit reports through much of Canada.

(It’s not necessary that you include a credit report with your small business loan application; it’s easy enough for potential lenders to check your credit rating.)

If you are a person with no credit rating, you will need to establish one before you will be able to get a small business loan. Basically, you establish a credit rating by buying things on credit and paying back the money you owe. Your loan repayment history plays a big part in establishing your credit rating, but all your “credit” dealings make up the history that’s used to determine your credit rating.

If you have an established business (in business for two years or more) you should also check out your business credit score and make sure there are no mistakes on your reports.

2) Make sure your cash flow is flowing.

Investors want to see a healthy operating cash flow margin – and the healthier the better. To them, your cash flow is the best indicator of your ability to pay back a loan. So if your cash flow is anemic or worse, choked off, you need to sort this out before you apply for a small business loan.

3) Gather together the documents that will help persuade the lender that a business loan is necessary and that you are a good risk.

Documents Needed

A business plan – The business plan shows the lender not only why you want a small business loan but what you plan to do with the money. Don’t have one yet? Here’s a simple business plan template you can use.
Cash flow projections – What’s the first question any lender has? Will you be able to repay the loan? Your business’s cash flow projections give lenders concrete financial data that they can use to assess this risk.
A statement of your personal financial status – A list of your personal assets and debts to give the lender a fuller financial picture.

You may also need these documents:

Past business tax returns – If your business is established and you have past business tax returns, it’s a good idea to take them with you. They’ll give the lender a better idea of how your business is doing financially.

4) Making the Presentation to the Lender

The next step in how to get a business loan is to persuade the lender that your business is viable and you are a good credit risk. You need to prepare in advance to make a winning loan presentation.

Start by considering the lender’s point of view. You want money. But he or she is most interested in the answers to these two questions: “What are you going to do with the money?” and “Are you a good risk?”, and to make a successful business loan presentation, you need to come up with the “right” answers to these two questions.

Answering the first question means being fully conversant with all the details of your business plan and being able to point to the relevant financial statements, charts or graphs that will help convince the lender that you need the amount of money you’re asking for to do what you want to do.

Answering the second question means having already given some thought to the credit risk you represent to the lender and being ready to address their concerns.

To get a small business loan, be prepared to tell your potential lender:

What collateral you have – Collateral refers to the tangible assets that you are willing to put up to secure the loan. These assets might be equipment, a house, a car – something of value that you own. If you fail to repay the loan, then the proceeds from the sale of the assets are used for repayment.
How much money you’re personally willing to put into the business – Being willing to risk your own money shows the lender that you’re committed to the enterprise.
Your expertise and/or experience in your chosen field – Because the success of your business is dependent on this to some degree, any potential lender will want to know more about you. Be prepared to talk about yourself when you apply for a small business loan – your background, your expertise, and even your aspirations.

How to Get a Business Loan? Be Prepared

Your chances of getting a business loan will be greatly improved if you have all your documents in order and are prepared to assuage the lender’s concerns about loaning you the money. Think of it as a presentation to an important client or customer, and you’ll have a better chance of success.

Read more about getting a business loan:

How to Get a Business Loan

Understanding what you want to get out of a business loan will help you choose the right one.

Related tools and products

A business loan can help you make your next purchase, fund growth, or manage cash flow for your business. But before you apply for one, you’ll need to work out which loan best suits you.

Here are eight steps worth taking before you apply for a business loan.

1. Understand your loan purpose

Being clear on why you want to borrow is the first step to choosing the right loan and it’s one of the first questions you’ll be asked by a lender.

Common reasons for taking out a business loan include:

2. Work out the loan amount

If you’re looking to borrow to buy an asset, knowing the amount you need will be reasonably straightforward. However, if you’re borrowing to cover a potential cash shortfall, working this out can be a little more involved.

3. Calculate what you can afford to repay

The length of the loan will impact your repayment amounts. Your lender can outline the different loan term options in detail. But before you have this conversation, work out what you can afford to repay each month. You can do this by looking at your business’ past financials and completing cash flow forecasts.

4. Decide between a secured or unsecured loan

You’ll usually be able to choose to have your loan secured or unsecured. Each has its benefits as well as considerations.

You offer an asset for the loan, such as property
The interest rate will usually be lower than unsecured
The lender may sell your asset if you’re unable to repay the loan

No asset is offered
The interest rate is usually higher
It can sometimes be more difficult to be approved for an unsecured loan

5. Choose a fixed or variable interest rate

As with other types of loans, you’ll often have the choice between a fixed or variable interest rate for your business loan. A variable rate may suit you best if you’re confident you can repay the loan even if rates increase. A fixed interest rate may be more appropriate and help manage your cash flow better by providing certainty with your repayments.

6. Understand the fees and charges

Make sure you understand the true cost of any loan by comparing all the fees and charges. Some fees you may be charged include:

Establishment or application fees
Ongoing monthly fees
Early repayment fees
Exit fees
Valuation fees (if you choose to secure your loan)

7. Get your paperwork ready

Preparing your business documents is an essential step that could help the lender make a decision sooner. Check out our guide to what information you’ll need to apply for a business loan.

8. Speak to an expert

A CommBank business banker can call you to discuss in more detail which business loans may suit you and answer any questions you may have.

Barring an unforeseen inheritance, a lottery windfall, or an unexpectedly successful Kickstarter campaign, your small business is probably going to require a bank loan at some point. Money comes from growth, but growth takes money, and small-business loans are among the toughest lines of capital to obtain. You should thoroughly prepare before you even approach a bank; it could mean the difference between getting what you need and getting back in line for another Powerball ticket.

That preparation begins here with these seven crucial steps for nailing down a business loan.

1. Establish your reason for the loan

The lender is going to hand over a significant amount of money to your business, and they’re going to want to know how and why it’s being spent. It’s a valid concern: how you invest the loan will affect your business’s income and ability to pay it back. Stocking up inventory or covering payroll would pass a bank’s smell test; purchasing a recreational 3D printer for the breakroom or consulting a psychic . . . not so much.

General rationales for small businesses seeking loans include management of daily expenses, expansion or purchase of equipment, building a cash buffer against possible future shortfalls, or just starting a business. Also, determine exactly how much money you’ll need to borrow—don’t ballpark it and end up with too much to pay back or too little to cover expenses.

2. Learn how banks assess you

Banks and lenders have their own formulas to determine if a loan will likely be paid back. In the case of small businesses, the formula usually involves—but isn’t limited to—five factors for consideration. Since small businesses also tend to be newer operations, they’re probably not going to excel in every area, but if they’re strong in at least three of the five, that can help level the bank’s assessment. Factors to pay attention to include the following:

How to Get a Business Loan

Credit score and history. If you’ve repaid loans responsibly in the past, the potential lender will find out—they’ll also find out if you haven’t. Banks can assess business and personal financial histories through a variety of avenues; most loan processes begin (but don’t necessarily end) with a credit review.
Collateral. What do you own that could cover the loan in case of default? Most banks and lenders will require something of value to shield the lender. Typical business items that qualify as collateral include real estate, buildings, vehicles, equipment, inventory, and accounts receivable.
Cash flow. The more money your business is currently making, the less of a loan risk it’ll be to the lender—simple math. Banks and lenders will not only look at the amount of profit you’re bringing in but also examine how you’re managing it. If the cash flows out as quickly as it flows in, it’s not a good look.
Time in business. If you’ve been functioning as a business for several years, you’re probably doing something right. Startups and newer businesses won’t have time on their side, but a solid, executable plan for reaching milestones will go a long way toward evening the odds in the lenders’ eyes.
Industry. What’s the forecast for your line of business? Technological and regulatory environment predications aside, geographical glut could also hinder your business’s growth. If you had a successful local brewery last year but six more are fermenting in the area this year, chances are they’re going to cut into your business.

3. Determine the type of loan you need

Small-business lenders will only go so small; most have requirements that your enterprise be somewhat established, with a certain number of months or years already in your ledgers. If you’re just starting out with no revenue or collateral, you could apply for a personal loan or a business credit card—but be aware that the interest rates are usually much higher, and personal loans don’t factor into building a business credit history.

Established businesses, on the other hand, have several options available to them:

How to Get a Business Loan

Does your business need extra cash? Whether you need money to buy new equipment, grow your business or purchase a plot of land, you may need a loan for your business to fund the transaction.

Small businesses borrowed $614 billion in 2016, according to a survey by the Small Business Administration. Loans under $100,000 saw the largest growth over the previous year.[1] No matter how much money you need, you can find what you need for a business loan as you consider applying.

Where to get a business loan

While some business owners turn to traditional brick-and-mortar banks for loans, a growing number are using online lenders. Twenty-four percent of businesses sought money from online lenders in 2017, which means those institutions are now competing with traditional banks. Forty-seven percent of business owners applied at small banks, and 49 percent applied at large banks, according to the Federal Reserve.[2]

If you’re wondering how to get a business loan, start by researching different lenders, and remember to include online lenders in your search.

Decide which type of loan you need

Before applying for a loan, understand the different options available. Two of the more common options are term loans and lines of credit.

Term loan: The most traditional and well-known option, the term loan offers businesses a set amount of money that must be paid back — with interest — over a certain period of time, or term.[3]

Line of credit[4]: A line of credit gives businesses the ability to borrow money as they need it, up to a pre-determined limit. The money is always accessible, and you only pay interest on the money you borrow.

If your business needs money to facilitate a real estate deal, there are commercial loans available for this purpose. These include:

Bridge loan: Bridge loans give businesses instant access to cash while long-term financing is considered.[5] This type of loan essentially “bridges time” until more substantial funds are available.

Permanent loan: Similar to a mortgage, a permanent loan gives businesses the capital to buy property and finance it for a lengthier period of time, such as a typical home mortgage length of 30 years.[6]

Mini permanent loan: A mini permanent loan offers short-term financing to handle construction costs and is usually paid back within a few years.[7]

You can learn more about commercial loans at Nationwide’s Business Solution Center.

How to apply for a business loan

When you’re ready to act, here are some important things to know about applying for a loan:

Know what banks are looking for: Lenders may be more apt to grant loans to businesses with a solid cash flow and good credit history. They may also be more likely to lend to companies with financial reserves and collateral to offer for security.[8]
Know what you want: When you apply for a loan, you need to know how much you want, how you plan to use the money and how you plan to repay the loan. Be able to explain why you’re a good candidate for a loan.[9]

Prepare a loan proposal: A loan requires more than a chat with a loan officer at your local bank. You may need to provide a loan proposal. This is a comprehensive overview of your business that explains what your business does, examines its history, looks at current activity, highlights the company’s leaders and provides pertinent financial statements that show the current and future economic state of your business.[10] Review these tips to prepare an effective loan proposal to learn more.

Wait for a response: Applying for a loan takes time. Even after you’ve prepared the paperwork and presented it to a lender, you still have to wait for a response. The approval timeframe varies and depends on the lender, the amount you ask for and what kind of loan you want. You might wait 60 to 90 days for a response.[11]

A loan can drastically change the course of your business, but it takes time to find the right lender, understand the different types of loans and gather the paperwork necessary for a loan proposal. With time, you can prepare accordingly and present a strong application to any lender.

As you’re reviewing the status of various elements of your company in preparation for a loan, it’s also a good time to review your insurance policy. A Nationwide agent can help you learn more about business insurance to make sure you have the level of protection you need.

How to Get a Business Loan

Are you trying to figure out how to get a business loan?

Businesses require money. Most entrepreneurs need some money to help get them off the ground. Even when things are going well, funds can be necessary to fill gaps and finance scaling. There are also times when companies want to bulk up on cash and access to credit in order to survive crises and disruptions. Business loans can be a great way to fill this need.

Why Get A Business Loan?

There are many uses that you need to keep in mind before tackling how to get a business loan. Even when you don’t immediately need the cash, savvy entrepreneurs have learned it is wise to stock up on capital in advance of their needs.

In a crisis access to credit and capital can dry up quickly. Just as we saw with Chase and Wells Fargo Bank just weeks into the COVID-19 pandemic. Take it when it is available.

Some business owners also see some advantages of loans over raising equity capital. Equity fundraising can provide access to much larger amounts of capital, with no burden of monthly debt service. However, loans can help avoid all of the extra work, distraction, and time drain of fundraising.

Especially in the early months when you are intensely focused on making the business work. This strategy may also help preserve your control and ability to make your own decisions about your venture and for your customers. Though this can mean foregoing the expertise of Venture Capital investor partners.

Types Of Business Credit

There are a variety of types of business credit available which may help put some light when wondering how to get a business loan. Each can have its place on your journey.

Business Credit Cards

One of the easiest ways to start out with business credit is simply with credit cards. These can be simple to apply for with a couple of clicks. It is a foundational move for separating an entrepreneur’s personal credit and finances from the business.

Some cards will offer over $10,000 or more in initial credit lines. A few of these can go a long way to getting a startup off the ground. Even better when they offer 0% interest and other introductory deals. Just watch out for those payments which need to be paid each month.

Business Lines Of Credit

The next step up is a line of business credit. These can be easier to obtain than you might think. They are generally larger than you’ll find with credit card limits. Though, their revolving nature makes them like credit cards in many other ways. The fees are usually low, and you only pay interest on the portion of the credit you are actually carrying as a balance.

One risk most don’t talk about is that during times of financial crisis banks have been known to slash credit limits. They do this with credit cards as well. So, be wary of relying on these for emergencies.

There are also a variety of types of working capital available for businesses with some track record and revenues. These include working capital loans, merchant cash advances, and factoring loans. These all center around funding based on your income record, and repayment based on forecast revenues.

Debt crowdfunding can also be used to raise money to start up a business and finance your next step. Some platforms provide small amounts in pretty quick time frames. Others can require far more strategy, marketing expenses, and work. Be careful you are really balancing the pros and cons versus equity crowdfunding. Maybe a good way when looking into how to get a business loan is to get rewards crowdfunding which comes without contractual obligations.

In additional general access to funds and capital, there are specialized financing options. This can expand your access to financing and provide more flexibility. This can include equipment financing, vendor financing, and real estate loans.

Regardless when you are looking for capital you need to master the story which is what raising money is all about. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

ACCESS THE PITCH DECK TEMPLATE

What You Need To Get A Business Loan

Business credit can be either incredibly simple or very complex to get. Not the one I would recommend the most given the high-interest rates when thinking about how to get a business loan. It depends on the type of financing and who you are getting it from. In many cases, it is just a couple of fields in an online form and a few clicks. You can get a credit decision in minutes.

In other cases, you may need a substantial amount of paperwork. SBA loans can be an example of this. As a commercial mortgage loan.

Tax returns
Bank statements
Profit and loss statements
A business plan
Executive summary
Personal guarantees by the owners

These criteria can also fluctuate with the economy. If things are tight lenders perceive more risk and can be tougher in underwriting requests. When everyone is bullish, their big problem is often just getting the money out the door and working as quickly as possible.

Furthermore, as you are looking at putting together your business plan you may find interesting the video below where I cover in detail how to write a business plan.

When You Can’t Get A Business Loan

When figuring how to get a business loan note that whether it is the market conditions, your personal or business finances, there can be times when it seems harder to get conventional loans than others. That doesn’t mean there isn’t funding available.

The other main alternative is to raise capital in exchange for equity. Depending on the stage of your business this may be from partners, angels, VCs, or other strategic and corporate investors. Some, like startup accelerators, will begin this relationship with convertible notes which can be converted from debt to equity investment.

Summary

There are many ways to get business credit to get your idea off the ground, keep it going, and grow it. In many cases, there are forms of business loans that can be much easier to get than you imagine. They just often aren’t from your traditional main street banks. If this isn’t an option, or you need even more capital, consult a fundraising expert on whether equity fundraising is for you.

I hope this gave you some guidance when thinking about how to get a business loan.

How to Get a Business Loan

Personal loans are widely available, but if you’re trying to borrow for a small business, you’ll find that the process is more difficult. If you’re thinking of borrowing money to start or grow your business, you’ll need to put in plenty of work before you even start to fill out an application.

Lenders want to be sure that they’ll get repaid. That means they’re looking to ensure that the loan makes good business sense, you (or your business) have a strong credit history, the bank can manage the risk, and the people managing the business are qualified and responsible.

Good Business Sense

Lenders only want to make a loan that helps you grow your business. You might be confident that the money will help, but you need to convince them of that fact. To do so, create an airtight case that proves (without exaggerating) how the funds will lead to greater revenue—and greater profits you can use to repay the loan.

Your business plan is essential to get approved for a loan. If you don’t have one yet, it’s time to create one. You need to use specific numbers that detail your big-picture strategy, including how you’ll earn money, how much money you’ll earn, and how you’ll spend that cash. Explain all of the major players in your business, with an emphasis on the roles of management, marketing, and sales—those individuals will bring in new business that helps pay for the loan.

It’s okay if you do all of those jobs yourself. Lenders just need you to explain why you take on so many roles, and you’ll need to show a track record of success in those areas. Your business plan should also include basic financial statements, Pro-forma statements, and information about your personal resources.

Building the Foundation

Here’s the frustrating fact about most small business loans: your personal finances are also important.

Banks want to see a history of successful borrowing any time they issue a loan. That includes loans for your business. Unfortunately, many businesses don’t have any history of borrowing (especially new businesses), so lenders look at your personal credit score instead. If you’ve got good credit, that’s a good sign that you’ll handle the business loans well. If you’ve got bad credit, lenders will be more skittish about lending and you may not qualify. If your credit is “thin” because you haven’t borrowed much in the past (or if it needs some repair), you might not get approved immediately, but you may be able to build your credit and prove to lenders that you deserve the loan.

You may organize your business as a corporation or LLC. Regardless, lenders will almost always want to hold you personally responsible for the loan. If they don’t do that, and the business fails, the debt disappears with the business. But if you make a personal guarantee on the loan (which is likely a requirement), you will be responsible for paying back the loan, no matter how the business performs. If you can’t repay, your credit will suffer.

If you have collateral to pledge for the loan, you’re more likely to get approved. With some businesses, you might be able to pledge assets associated with the work, such as vehicles and equipment. If your business doesn’t own a sufficient amount of assets, you’ll have to pledge personal property like your home.

Where to Borrow

Once you’re organized and you know what to expect, it’s time to start talking with lenders. You have several options for borrowing, and each option comes with pros and cons. Borrowers are best served by talking with a variety of lenders to gain a full understanding of their requirements and options for a loan. Don’t just fill out applications and take the loan from the first lender to say “yes.”

Banks and credit unions are traditional sources for small business loans, and they’re a good place to start. Especially with small institutions, you’ll be able to meet with a lender who can guide you through the process. Larger banks might take a more hands-off approach. To improve your chances of getting approved, ask about SBA loans, which reduce the bank’s risk and feature interest rate caps. The loan process at banks and credit unions can be slow, so be prepared for a long process and a thorough review from the bank.

Online business lenders are a relatively new option, and they might provide more choices than you can find locally. You might also find it easier to get approved—these lenders are more interested in funding loans and growing than conservative, established banks and credit unions. Online lenders might also move faster than traditional lenders. That said, they’re not looking to lose money, so the loan still needs to make financial sense to the lender. Easier and quicker access to money could come with drawbacks like higher rates.

Microlenders might be willing to help if you meet certain criteria. These lenders may not have the same level of resources as a traditional bank, so you might not get as big of a loan, but microlenders are usually less concerned with profit and more concerned with development. Lenders in this space want to see businesses grow and become stable. They may bundle the loan with coaching and training to help get your business on firm financial footing.

Microlenders often prefer to invest in underserved communities or low-income individuals. They’re attempting to fill a void left by traditional banking. If you have significant income and could easily qualify for a traditional loan, microlenders might not be as eager to issue your loan, especially since microloans come with low fees and interest rates.

Online personal loans are an option when nobody will approve you for a business loan. Ideally, you would borrow in the name of your business—it’s cleaner and more professional that way. But if you can’t convince a lender to issue a loan for your business, you can try again for a personal loan. These are easier to secure, but the loans come in smaller amounts, and the terms of the loan may not be as attractive. For competitive rates and a quick approval process, try marketplace lenders and peer-to-peer lenders.

How to Get a Business Loan

The Small Business Administration, also known as the SBA, has specific loan programs that are designed to provide startup capital as well as business financing for military veterans. The Small Business Administration allots millions of dollars each year to military veterans at very low interest rates. If you are a military veteran, then you qualify for a VA business loan through the Small Business Administration.

How to Get a VA Business Loan

Step 1

Call the Small Business Administration answer desk at 1-800-827-5722. Ask a representative for the contact information for your state’s local Small Business Administration.

Step 2

Call your local Small Business Administration and tell the representative that you would like to apply for a VA business loan. The representative will then take down your information to see if you qualify and mail you a VA business loan application known as the “Patriot Express Pilot Loan Initiative”. To qualify, you must be either an active service member, a retired military veteran, a disabled veteran or a spouse of any of the above.

Step 3

Fill out the entire VA business loan application, check it over for errors, and return it to your local Small Business Administration office.

Step 4

To fill out the VA business loan application known as the “Patriot Express Pilot Loan Initiative” online, go to and look up the “Patriot Express Pilot Loan Initiative”. You can review the qualifications and print out the loan application straight from the website. Fill out the loan application and mail it to your local Small Business Administration office or deliver it in person.

Step 5

Wait two to three weeks and then call the Small Business Administration at 1-800-827-5722 and inform the representative that you would like to check on your loan application. The representative can check the status of your loan application and tell you if you have been approved or denied for the VA business loan, and the reasons why.

For faster service, call the provided Small Business Administration contact numbers above and ask the representative to send you the “Patriot Express Pilot Loan Initiative” loan application and take it to your local Small Business Administration office in person.

For a faster approval process, apply for the Patriot Express Pilot Loan during the first few months of the year.

Warning

Stay away from business loan and grant scams. If you are asked to send money, then chances are that it is a scam. The Small Business Administration is a legitimate association that helps millions of people obtain grants and loans each year to start and run a small business.

How to Get a Business Loan Many people believe that getting a small-business loan is utterly impossible. This unfortunate belief leads many people to think that they simply can’t create a small business, and thus what may have become an amazing enterprise never becomes a reality. Is it hard to get a business loan? Certainly it is. Is it impossible? Of course not.

So how hard is it to get a business loan? Is it a realistic choice for every type of person? To answer this question, let’s look at what a bank or alternative lender looks at when they try to judge whether or not to support your small-business idea:

Risky Business

When securing financing, it’s important to see your business from the lender’s perspective. Would you invest in this? Is this business going to be profitable? How easy is it to get your money back, or how hard is it? To get a business loan, you need to assure them that it will be successful enough that the lender won’t lose money. Surely, investors know that every investment has inherent risk, but in order to be financially viable, they need to be at least 90% sure that you will not default on your loan. That’s pretty confident. The lenders will examine the following:

Solvency or Cash Flow: How much money will be going into the business, and does that suggest profitability?
Collateral: Should they have to liquidate the business, will there be enough valuable assets to make up the difference in the loan?
Legal and Tax Liability: Is the business any kind of financial or legal risk?
Diversification: Will your revenue stream be concentrated from one source, or will it be more diverse, with the opportunity for more income from alternative places?

Your Character

The way you present yourself is very important, as business is about interpersonal relationships as much as it is about numbers. The people lending to you want to make sure that you are a responsible, trustworthy person. Of course, everyone thinks that they are, but banks will closely examine past finances to make sure that they have proof of your trustworthiness:

Years in Business: Is this a first-time entrepreneur (who is less likely to be successful) or a more experienced entrepreneur who has failed (who is more likely to be successful)?
Credit History: This is the one bit of financial proof that you can pay a loan back on time.
Your Equity: The banks want to know that you are personally invested in the project.
Your Personal Guarantee: Do you guarantee that this will be successful, to the point that you’ll be personally responsible for it if it’s not?
Your Branding: Are you capable of pitching and marketing your idea?

Organization

When you are applying for a business loan, your financial documents should be meticulously detailed. You should also have extensive plans outlining how you will achieve success. This should seem reasonable and logical: Blowing your potential success out of proportion will not help you here. When projecting your income for the year, it shouldn’t seem like wishful thinking. When preparing for this aspect of your interview, working with an experienced accountant like those at Ignite Spot would help. An online, outsourced bookkeeping firm can help you to compile this data in a more professionally presentable way.

Cash Flow Forecast: Are the projections reasonable and logical, or are they overblown?
Business Model: Will the business be organized in an adaptable or rigid way?

More Helpful Tips

Ask yourself the hard questions before they do.
Work with an accounting firm from the beginning, like Ignite Spot, to help present financial information.
Build a long-standing good relationship with that specific bank.
Always be realistic; don’t overestimate your potential income.

Is it hard to get a business loan? It depends on a variety of factors, including you! If you’re interested in putting your best foot forward with the bank, feel free to contact Ignite Spot at 855-694-4648 and learn about our services. Download our free audiobook, which is full of profit-building workshops and more helpful business advice.

Sep 16 2019 | PayPal editorial staff | 7 min read

As a small business owner, you’ll most likely encounter situations where it’s helpful to have additional cash on hand to manage the ups and downs of your business.

However, to get the funding your business needs, you’ll need to understand how to get a business loan. This guide walks you through the general 5 phases of how to apply for a small business loan so you know what to expect.

The five phases of getting a business loan.

Before you research potential lenders, you’ll want to do some homework.
How to Get a Business Loan

Visit the website for more information and eligibility requirements on PayPal Working Capital.

* PayPal Working Capital is provided by PayPal Credit Pty Ltd ABN 66 600 629 258

When you have an idea of how much you need to finance your next project or goal or refinance existing debt, consider a Business Term Loan. With our commercial lending capabilities, you can borrow $10,000 or more to buy equipment, expand your operations, and much more.

How to Get a Business Loan

Is a Business Term Loan Right For Your Business?

You’ve been in business for 2 years or more (if less, with an SBA guarantee).

You need funds to expand operations, purchase equipment, or refinance debt.

You’d like predictable monthly payments to help you manage cash flow.

Compare a Business Term Loan to our other lending options

Whatever your financing needs, we’ve got a financial solution that makes sense for your business. Explore your choices using this comparison chart.

Business Line of Credit	Business Term Loan	Business Owner-Occupied Commercial Real Estate Mortgages ±	Business Equipment Finance
Great Choice For	Short-term working capital financing needs	Financing needs requiring longer term to pay	Purchase, renovate, or refinance owner occupied commercial real estate	Financing equipment and vehicles
Potential Uses	Finance accounts receivable Purchase inventory Support seasonal cash flow fluctuations	Acquire fixed assets Refinance non-Santander debt with fixed monthly payments	Acquire commercial real estate Improve or expand existing building Refinance non-Santander existing real estate debt	Acquire vehicles or equipment, some of the qualifying vehicles and equipment include medical, construction and agricultural
Available Amounts and Details	Revolving lines for amounts starting at $10,000	Minimum amount to borrow $10,000	Minimum amount to borrow $25,000	Minimum amount to borrow $50,000
Length of Loan	Revolving with renewals occurring once a year for lines of credit greater than $750,000.	From 3 years to 7 years	Up to 25 years	From 3 years to 10 years
Additional Benefits	Unsecured lines up to $150,000 No financial statement required at time of application for line of credit requests up to $150,000 #	Fixed interest rates	Finance up to 80% of the lesser of the purchase price or appraised value	Available 100% financing † of costs including taxes, freight, installation, software, warranties and training Low fixed or floating rates available
Learn moreGet in touch	Learn moreGet in touch	Learn moreGet in touch	Learn moreGet in touch

Benefits of A Business Term Loan

Always know the amount and due date of your monthly payment.

Get next-day credit decisions for amounts up to $150,000. 2

Help avoid late payment fees and enjoy a rate discount when payments are automatically debited from your business checking account. 3

Enter your location

Please, tell us where you live so we can give you accurate rate and fee information for your location.

Any accounts opened online will be assigned to the branch closest to your residential zip code, and will receive the interest rates and APYs available at that branch.

Manager Name

Serving Business with x qualifications

Phone:

1.666.666.6666

Phone:

1.666.666.6666

Additional Accounts

Discover additional services that may benefit your business.

Choose one of our many checking solutions, designed to fit your business.

Business Line of Credit

A flexible and reusable source of funds whenever you need it.

Provide your customers convenient and secure payment methods — in store or online.

* The products and information provided on this page are only for small businesses with annual revenues up to $3,000,000, subject to acceptance rules, policies, and guidelines of Santander Bank, N.A. For other Business Banking customers with a dedicated relationship manager, please contact your relationship manager directly.

1 For approved business applicants, Santander Bank will waive the one-time origination fee on a new business line of credit (“BLOC”) of $10,000 and up if the approved applicant either has or opens at time of BLOC closing a Santander Business Checking or Santander Business Checking Plus account. Additional fees, terms, and conditions may apply.

± Owner-occupied real estate is defined as property where the owner-operating company occupies more than 50% of the gross rentable space, and generates more than 50% of the cash flow necessary to service debt; otherwise, property is considered Investment Real Estate.

# For BLOC applications between $10,000 and $150,000, financial statements will be required at the time of application if: (1) your business is a not-for-profit organization; or (2) your business’ existing Santander Bank business credit exposure at time of loan application in addition to the loan application request amount exceeds or will exceed $150,000; or (3) your business’ existing Santander Bank business credit exposure at time of loan application in addition to the loan application request amount is more than 10% of your business’ most recent annual sales.

† 100% financing of equipment and vehicle cost is only available for businesses that have been in legal and/or operating existence for two or more years prior to the date of receipt of completed application by Santander Bank. 80% financing of equipment cost is available to businesses that have been in legal and/or operational existence less than 2 years as of the date of receipt of completed application by Santander Bank.

2 Financial statements and/or pledged collateral may be required with any loan. For credit products from $10,000 to $150,000, next-business-day credit decisions are not available and both financial statements and pledged collateral will be required at the time of application if: (1) the applicant is a not-for-profit organization; or (2) your total proposed business credit with Santander Bank exceeds $150,000; or (3) your business’s existing Santander Bank business credit exposure at time of loan application, in addition to the loan application amount, would be more than 10% of your business’s most recent annual sales; or (4) your business is applying for a commercial real estate loan.

3 Rate discounts are based on your business’ relationship with Santander and when payments are automatically debited by electronic payment (E-Pay) from your Santander business checking account.

How to Get a Business Loan

Is a Business Term Loan Right For Your Business?

You’ve been in business for 2 years or more (if less, with an SBA guarantee).

You need funds to expand operations, purchase equipment, or refinance debt.

You’d like predictable monthly payments to help you manage cash flow.

Compare a Business Term Loan to our other lending options

Whatever your financing needs, we’ve got a financial solution that makes sense for your business. Explore your choices using this comparison chart.

Business Line of Credit	Business Term Loan	Business Owner-Occupied Commercial Real Estate Mortgages ±	Business Equipment Finance
Great Choice For	Short-term working capital financing needs	Financing needs requiring longer term to pay	Purchase, renovate, or refinance owner occupied commercial real estate	Financing equipment and vehicles
Potential Uses	Finance accounts receivable Purchase inventory Support seasonal cash flow fluctuations	Acquire fixed assets Refinance non-Santander debt with fixed monthly payments	Acquire commercial real estate Improve or expand existing building Refinance non-Santander existing real estate debt	Acquire vehicles or equipment, some of the qualifying vehicles and equipment include medical, construction and agricultural
Available Amounts and Details	Revolving lines for amounts starting at $10,000	Minimum amount to borrow $10,000	Minimum amount to borrow $25,000	Minimum amount to borrow $50,000
Length of Loan	Revolving with renewals occurring once a year for lines of credit greater than $750,000.	From 3 years to 7 years	Up to 25 years	From 3 years to 10 years
Additional Benefits	Unsecured lines up to $150,000 No financial statement required at time of application for line of credit requests up to $150,000 #	Fixed interest rates	Finance up to 80% of the lesser of the purchase price or appraised value	Available 100% financing † of costs including taxes, freight, installation, software, warranties and training Low fixed or floating rates available
Learn moreGet in touch	Learn moreGet in touch	Learn moreGet in touch	Learn moreGet in touch

Benefits of A Business Term Loan

Always know the amount and due date of your monthly payment.

Get next-day credit decisions for amounts up to $150,000. 2

Help avoid late payment fees and enjoy a rate discount when payments are automatically debited from your business checking account. 3

Enter your location

Please, tell us where you live so we can give you accurate rate and fee information for your location.

Any accounts opened online will be assigned to the branch closest to your residential zip code, and will receive the interest rates and APYs available at that branch.

Manager Name

Serving Business with x qualifications

Phone:

1.666.666.6666

Phone:

1.666.666.6666

Additional Accounts

Discover additional services that may benefit your business.

Choose one of our many checking solutions, designed to fit your business.

Business Line of Credit

A flexible and reusable source of funds whenever you need it.

Provide your customers convenient and secure payment methods — in store or online.

3 Rate discounts are based on your business’ relationship with Santander and when payments are automatically debited by electronic payment (E-Pay) from your Santander business checking account.

Access to capital is an ongoing need for growing businesses. Whether you want to hire several more employees, open a new location, increase production, or develop new products, a business loan can provide your small business the money it needs.

How successful you are at getting the bank loan will depend on how successful you are at convincing a lender that you’ll be able to repay your loan on time. That decision will be based on a number of factors including the business’ income and credit record, your business plan, the nature of the business, your industry, the business experience of the owner(s), the personal credit of the owner(s), your collateral, and the lender you choose.

To evaluate those factors, lenders will ask you to complete a loan application and provide a variety of information and documentation. Although the specifics will vary from one lender to another, you may need to provide some or all of the following:

Loan request details:

Why you want the loan
How much you need
How the money will be used
Amount of time needed to repay the loan
What other business debts you have

Business Plan

This would include a description of the business, description of the products and services, marketing projections (and how you plan to achieve your goals), resumes of the principals in the business, and financial projections

Legal Documents

Business licenses, incorporation documents, patents, commercial leases, franchise agreements, or other legal documents related to your business.

Financial Statements

Profit and Loss Statement (also called an Income Statement) for an existing business
Balance sheet
Cash flow statement
Accounts receivables and payables reports (for an existing business)

Tax Returns

Both business and personal tax returns from the last three years may be required.

Credit Reports

The lender may require credit reports both for the business (if it’s already established) and personal credit reports for the owner(s).

Collateral

Collateral is something of value that can be used to repay the loan if the business defaults on the payments. That something of value would be something the lender would be able to sell to recoup its losses if the business can’t pay off the loan. The “something” might be inventory, equipment, bank accounts, or even your home.

Gathering all of the above information and documents before you approach a lender, will help you speed the loan application process. It should also help you get a clearer vision of your business needs and the businesses’ ability to repay the loan.

Other Small Business Financing Options

The US Small Business Administration offers a number of loan guarantee and other programs for financing growing businesses. Some, such as the SBA 504 loans are designed for big projects to boost economic development. The SBA programs often provide guarantees to make it easier to get bank financing.

Banks aren’t the only sources of loans for small businesses, however. Many other sources of small business financing exist as well.

About the author:
Janet Attard is the founder of the award-winning Business Know-How small business web site and information resource. Janet is also the author of The Home Office And Small Business Answer Book and of Business Know-How: An Operational Guide For Home-Based and Micro-Sized Businesses with Limited Budgets. Follow Janet on Twitter and on LinkedIn

How to Get a Business Loan

It’s not unheard of for individuals to rely on lending institutions to get out of a financial pinch. If your source of income is your business and it’s going through a tight spot, getting a small business loan can be the only available lifeline. The unfortunate news is that a bad credit score can be a serious barrier to your request for a loan.

To help you navigate such a difficult maneuver, we’ve created a guide that should help you understand how you could get a small business loan without having good credit.

Short-Term Loans

If there is a miniature version of conventional long-term loans provided by lending institutions, it is short-term loans. These loans may provide you with the same total amount or value, but the difference is in how challenging the conditions are going to be. Expect to face more obstacles along the way if you’re used to getting long-term loans by banks because of how the schedule of repayment can be much shorter in short-term loans.

The basic foundations like the principal, interest, and payment schedules may share some similarities, but expect the schedules to be less than 18-months, based on the principal and funding potential. You may be required to put in collateral or agree to higher interest rates than usual if you have bad credit.

Equipment-Based Financing

If you’re in a line of business that requires certain equipment to operate, upgrading or purchasing new equipment is a pretty necessary step. If you’re wondering how to get a small business loan with bad credit, the good news is that you can use the equipment to secure financing as well.

Using the equipment itself as collateral is the reason a lot of business owners with bad credit can secure the financing without being a risk in the eyes of the lender. The lender can immediately pull the equipment that they are providing for you, whether you’re leasing or purchasing it, once you default on payments. You may need to put in a little down payment with some lenders if you have bad credit.

Line of Credit

Lines of credit are not like loans, where there is a set amount that you and the lender agreed to. Instead, an approved candidate for a business line of credit receives permission to spend funds as they need from a certain account with a set limit. That said, business lines of credit are similar to business credit cards since you can withdraw any specific funding that you need for your business and pay the interest for that specific amount.

If you have bad credit, you may be required to pay interest on a weekly schedule. Most people with bad credit scores are able to secure business lines of credit by offering collateral to offset the risk of their reports.

How to Get a Business Loan

When it comes to business opportunities, things happen so quickly that wrong timing can sometimes mean kissing the opportunity goodbye. Having bad credit stops you from planning the expansion of your business or starting your dream business can leave a very bad everlasting taste in your mouth for years to come. So make sure you use our simple tips to get through it.

Getting a small business loan is one of the many challenges you’ll face as you start your design business. While it may seem daunting, we’re here to help with a guide that outlines everything you’ll need to do as you learn how to get a small business loan. How do you apply? What are the requirements for securing funding? What types of loans are best for budding entrepreneurs? How can you position yourself as a desirable candidate? Take it step by step, and you’ll discover that funding your new interior design firm is not as challenging as you might think. Here’s what you need to know.

1. Get clear on why you need the loan—before meeting with a lender

Every lender who will consider giving you a loan will ask: Why do you need this loan? How are you planning on using it? Prepare yourself by answering these questions ahead of time. Discern how the funds will help you start and grow your business. Typically, first-time entrepreneurs seek loans for the following reasons:

• To start a small business

A startup loan will provide funds to get your company off the ground, covering all the expenses related to launching a new small business.

• To afford daily expenditures

A working capital loan is a short-term loan option that will help you with your daily expenses until you are generating enough income to cover these costs yourself. This type of lending is often used to pay for invoices, inventory, marketing, and payroll until you start producing a steady stream of income.

• To grow the business

Some entrepreneurs will want to borrow money to make investments in the future of the small business and to help expand the company.

• To have a safety net

Having backup funds is critical to a new entrepreneur’s survival. Unforeseen expenses could pop up, or you might find yourself in an emergency situation if you urgently need to replace a piece of manufacturing equipment or order inventory. Cash-flow gaps often present the biggest challenge for a new small business owner; a working capital loan can help.

2. Figure out how much financing you can actually afford

How much financing you think you need may not coincide with how much you can afford to borrow. Be mindful to not end up in debt. It’s crucial to meticulously calculate how much you can afford in loan payments each month. Consider using an online business loan calculator to gauge what is reasonable based on the type of loan you’re applying for.

3. Decide what type of lender is the best fit for your small business

It can be difficult to secure a loan during your company’s first year, as lenders require cash flow to prove the ability to repay the loan. Often, new entrepreneurs rely on business credit cards, borrowing from friends and relatives, or personal loans. Once you are prepared to apply for your first small business loan, you must first determine which type of loan corresponds with your financial profile, credit profile, and the reasons you’re seeking financial backing.

As a small business owner, you have several lending options. Joe McClure, district director of the Montana District Office of the U.S. Small Business Administration, recommends first approaching the financial institution where you currently do business. “They have firsthand knowledge about you, your character, and your history,” he says. “If your bank says no, don’t be discouraged. Think of it as an opportunity to shop around. Some lenders do not make certain types of loans, so although you may not qualify for a loan at one institution, you may be approved at another.”

Let’s examine which types of lenders best suit your financial profile and your needs.

• Bank loans

The cheapest financing option for small businesses, bank loans can offer interest rates as low as 5 percent. According to Fundera, an online financial resource for small businesses, if you get a loan offer from a bank, you should take it, because it can be difficult to qualify for a bank loan, and it can be a long, detailed, and arduous process. The application can take weeks to complete, and it may be months before you hear whether you’re approved.

To qualify, you need a strong credit score (above 700), you should have personal or business assets to serve as collateral, and it will help if your business is already profitable. It’s a risk for banks to take a chance by lending to a first-time entrepreneur, so being able to show a profitable business will greatly help your chances of obtaining a loan. A bank loan is best for those who want to borrow more than $250,000.

• SBA loans

Though Small Business Administration (SBA) loans are a bit more expensive than bank loans, they are still fairly affordable, are slightly easier to qualify for, and have a simple online application process. SBA doesn’t actually fund the loan, but it guarantees up to 85 percent of the loan amount that’s provided through an SBA-approved lender bank. With the SBA’s support, the loan becomes less risky for the lender, and as such, it’s more likely that you will be approved for this type of loan. But you’ll still need exceptional personal credit to qualify.

There are three types of programs to help you qualify for an SBA loan: The 7(a) program is for loans up to $5 million that can be used for working capital; the microloan program is for loans less than $50,000; and the CDC/504 program is for commercial real estate. The SBA sets maximum interest rates for these loans between 5 and 10 percent.

• Medium-term alternative loans

With a simple online process, you can get approved for a medium-term alternative loan and receive the funding (from $50,000 to $2 million) within two weeks—making this an excellent lending option for small business owners. However, interest rates fluctuate and can go up to 20 percent, which is more than twice that of a bank or SBA loan. Repayment terms are between one and five years.

• Short-term alternative loans

There are a lot of positive things about short-term alternative loans: Your loan can be approved and funded on the same day that you apply; you do not need to have above-average credit to qualify (a credit score above 500 is required); and it’s possible to be funded if you’ve only been in business for a year. However, all these conveniences come at a price: APR on short-term loans can range from 8.5 percent to a whopping 80 percent, depending on your credit profile. Your repayment plan is just three to 18 months with a program of daily or monthly payments.

How to Get a Business Loan

Local government has ordered people to stay at home in order to stop the spread of Covid-19. And staying home that’s what is hampering local business, and those local businesses have bills to forfeit.

Over and over for the last few days, the government is exceeding more loans to the local business.

Now, today in this blog we are going to talk about what they are and how to get them owing and operating your very own business can be a dream come true endeavor for most individuals who get involved in such an ordeal, however, money can become an issue as it takes quite a bit of capital to get started and if you do not already have it what are you supposed to do?

We are here to give you the answer and the answer is not that difficult. You just need to borrow a small business startup loan.

Start-up business loans are basically just money lent to you to help to operate your business but like every loan, you will have to pay it back.

So now you are aware of the fact that there is something called a small business start-up loan.

You must be wondering how to choose a small business start-up loan?

Look how this reference gave the best answer on Can i get a small business loan with bad credit?

Yes Off course you can!

A lot of the times a small business start-up loan can be extremely difficult to obtain mainly because banks do not want to take a risk of lending money to a person who shows no potential. Most businesses fail within a couple of years and banks recognize that fact meaning that any person seeking startup loans will be considered a risk.
Most of the time endeavor, endurance, and willpower is what is required to get a small business startup loan.

After you have put together a solid business plan the two main places to go to obtain a small business would be

These two places usually always offer small business start-up loans but they can sometimes be tremendously difficult to obtain.

One reason why it can be difficult because your business plan has to be pretty much flawless.

One more thing that most of the banks and credit bureaus look at is your credit score. But you must be prepared for rejections from banks if you do not have an exceptionally good credit rating.

Another place to lend money which is also a less demanding platform will be from your family, friends, or anybody who is willing to invest in your business.

You have to do a lot of convincing
You must be really close to those people if you want them to invest money in your business.

The simplest way of getting some cash is to just pitch yourself as many different people as possible, and be hopeful that your convincing skill will convince them to become investors in your startup business.

If you have a great convincing skill and can pitch yourself well enough and also have a solid business plan then you must not find this that tough of a time finding a small business startup loan.

No matter how you try to obtain the loan remember to never lose hope and to keep on trying.

How to Get a Business Loan

Looking for something more?

10 thoughts on “ How To Get A Business Loan ”

I m planning to start new business… I have on idea about interior designing or other business so can I get business loan for this? and what is the documents to give the bank

To get a business loan you will have to first start your own business, have a significant amount of sales and generate income/profits through it. Banks will need a valid income proof, valid id proof and sometimes a guarantor too. For starting your business, you might have to get a loan against property or a Personal Loan. If you are presently not employed, getting a Personal Loan may not be easy. We suggest that you consider a loan against any of your assets.
Cheers,
Team BankBazaar

hi. I m planning to do new business. I have some idea about business soo please help me can I get bank loan for women . I m interested in doing business

Read this article to know more about business loans for women.

Cheers,
Team BankBazaar

hi. I m interested to open silk and designer saree house. I m planning to open big budget. soo can I get loan for this business up to 10 lakh. please suggest me.

Hi I am vineela I had a beauty parlour, I am running it from last 2 months, I want a bank loan on my certificate and shop. Can u give me a business loan

Thank you for getting in touch. You can get a Personal Loan for your business. Check your eligibility for a Personal Loan by clicking here. However, do know that granting a Personal Loan is purely at the discretion of the bank. Hope this helps!

Cheers,
Team BankBazaar

Hii i manisha
I opne my own shop which is cosmetics lady under garment n imitation jwellery shop so i want loan on that business but with government subsidy is this possible

Thanks for getting in touch. You can read this article on 8 Steps To Start Your Own Business to understand how to get started with your business.
And if you need a loan, you can check your eligibility here.
Certain eligibility criteria such as income bracket and maximum tenure of the loan will be taken into consideration. SIDBI does offers subsidy for loans. For business loans, you can claim tax exemption but there might not be any subsidy.

Are you about applying for a loan from a foreign bank as a small business owner or startup entrepreneur? If YES, here are 7 easy steps to get a foreign bank loan guaranteed. One of the things that make a business run effectively is the availability of funds.

To a very large extent, funding is very vital for any business. As a businessman or woman, there will be a point in time where you would need business loan and in some cases the loan might be from a foreign bank especially if you are an international business person.

Table of Content

Why Apply for a Business Loan from a Foreign Bank?

The truth is that there are international contracts that need international loans to execute them hence the need for banks to make available loans for foreign businesses.

A foreign business loan is defined as a viable funding option for a business from a foreign bank or financial lending house especially if they have overseas connections or if they are expected to execute a project in the countries where the foreign banks or financial lending houses have strong presence.

The fact that foreign banks are usually represented in the united states makes it easier for businesses in US to access foreign business loans. Foreign banks are represented in one of four ways in the United States. The banking entity may be a branch, an agency, an international banking facility or a foreign owned bank.

A large percentage of foreign banks can be found in 3 states: California, Illinois and New York. No doubt, the physical location of a lending institution is not as important as it was several decades ago due to electronic banking and online services.

If you own a business and you want to access foreign loans for your business, here are some simple guidelines that you are expected to follow; Here are some of the steps that you are expected to follow if you want to apply and get a business loan from a foreign bank;

How to Apply and Get a Business Loan from a Foreign Bank

1. Read the Business Loan Requirements

If you are applying for a foreign loan as a business that is operating in the United States, one of the first steps you need to take if you are certain that foreign business loan is the way to go is to ensure that you read up all the requirements for a foreign company seeking loan from a foreign bank or financial lending institution.

You need to ensure that you select the foreign banks or financial lending institutions you want to get business loan from and then read up all you can from their official website or call them to get firsthand information of all that is required from you to access their business loan as a foreign company. With that, you will be bettered prepared to apply for the business loan and the chances of your application getting thrown out will be reduced.

2. Prepare the Business Loan Application Proposal

If you are through with your findings and you have been able to pencil down one or more foreign banks and financial lending institutions that you are qualified to get foreign business loans from, the next step for you is to gather all the required documents as stipulated in their website, prepare the business loan application and ensure you meet the expected standard.

Some of the common documents that are expected from you when you apply for business loans are a strong statement stating why you need a foreign business loan, certificate of incorporation, your tax clearance, your financial statements and of course your business plan.

As a matter of fact, your business plan should include the management cum business owners’ resumes, financial results and projections (Profit & Loss, Balance Sheet and Cash Flow Statements), and personal financial information including three years of tax returns.

3. Submit Your Application

After carrying out your due diligence and properly packaging your business loan application, you now have to submit the loan application. You can choose a reliable courier company to help you deliver your application. Just ensure that you get a contact person from the bank or financial institution.

The truth is that you need to constantly stay in touch so as to know when the loan will be approved and how much will be approved. This is necessary because the fact that you are qualified for a business loan as a foreign company does not stand as a guarantee that the loan will be granted to you. In some instances, you might have to lobby to get the exact amount that you applied for.

Guidelines for Loan Application to a Foreign Bank

a. Your Business Must Be Duly Registered and Qualified for Foreign Loans

Of course it is not every business that can access foreign loans and there are levels of foreign loans that can be accessed by businesses. For example, you must have grown to a conglomerate or corporation for you to be able to access loans from the World Bank.

The fact that World Bank gives out loans to businesses to execute international projects does not make every business qualify for such loans. In essence, the status of your business is part of what will determine if you are qualified for a foreign loan or not.

Note that lenders will access your credit score and your debt to income ratio to determine if you are qualified for the business loan. A credit score of above 650-700 is considered acceptable, but does not guarantee a loan. Most lenders will look for a credit score that is at least within the range of 700 to 800 and your personal debt payments should not be more than 33 percent of gross monthly income.

So also, the duration of your business will go a long way to determine if you are qualified for a business loan as a foreign company. The fact is that foreign lenders give unsecured working capital lines and term loans to businesses which are over 2 years old and have a reliable record of incoming accounts receivables.

b. Your Business Must Have Standard Financial Reports

Let us get straight here; if you are just starting out in business, you are definitely not qualified for a foreign business loan. This is so because before any bank or financial institution can grant you loan as a foreign company, they would want to see your financial statement and your volume of business transaction for a period of time.

In this blog post, we’ll offer tips on how to get a business loan with bad credit, in addition to a few ways to build business credit and improve your chances of getting approved. Let’s get started, so that your business can get the financing it needs!

7 Ways to Get a Small Business Loan with Bad Credit:

1. Research Lender’s Credit Score Requirements

In the preliminary stages, conduct research and determine which lenders provide loans for small business owners with bad credit. This will be especially important if your credit score is under 500. Some lenders are relatively lenient on this, but if your score is less-than 500, it may make lenders apprehensive about working with you.

Don’t waste your time applying with a lender if you don’t meet their minimum credit score requirements. Instead, focus on ways to build business credit, and apply for a business loan once your score has improved. If you’re in a crunch and need additional working capital as soon as possible, try and find a lender with a lower credit score minimum.

2. Create a Clear Business Plan

When applying for small business loans with a low credit score, it will be helpful to have an organized business plan that you can share with your lender. This will likely be helpful in convincing them that you can handle the repayment terms.

In addition, you should be ready to share your monthly sales amount. Hopefully you’ll be able to show improvement in your business’s finances over time. Even if your credit score isn’t stellar, a lender may be more apt to work with you if they can see that your finances are on an upward growth trajectory.

Another section that you should include in your business plan is information on how you plan to use the loan. For instance, perhaps you’re planning on using a loan to purchase a new piece of equipment. Outline this in your business plan and explain how using this loan for this cost will benefit your business’s finances in the long-term.

In the equipment example, you could explain how once you have updated equipment, you’ll be able to service more customers (and in turn earn more sales). This could convince a lender to work with you, even if you don’t have an excellent credit score.

3. Be Prepared to Receive a Higher Rate

When applying for working capital from a lender, you’ll need to consider the rate they’re providing you with. If your business has a low credit score, it may result in you receiving a higher rate than a business with an above average credit score. This is because the lender will likely assess you as a higher risk customer.

Due to this, you should consider whether your business will be able to responsibly pay back the loan amount. If you don’t think you’ll be able to afford loan payments while also keeping your business operational, it might be better if you wait on taking out a loan.

How to Get a Business Loan

4. Take Steps to Improve Your Credit Score

If you’re serious about getting a business loan despite your bad credit score, the answer is simple: improve your credit score prior to applying. First, you’ll need to examine your business credit report so that you can see your score and determine if there are any discrepancies. If there are, you’ll need to report these issues to all credit bureaus so that your score can be adjusted.

It’s important to realize that raising your score isn’t something you can achieve overnight. Getting a better score will require you to form healthy financial habits, and then prove your financial responsibility to credit bureaus over time. This can be frustrating if you need a loan as soon as possible, but it may be your best bet.

If you’re not in a rush to receive financing, you should focus on raising your score, and then focus on applying. Make sure to keep reading, because #7 features a simple way to help build your business’s credit.

5. Pursue a Merchant Cash Advance

If you’re interested in small business loan options but have a low personal credit score, you may be better off applying for a merchant cash advance.

A merchant cash advance is a type of business financing, but it isn’t a loan. When you receive a cash advance, you’ll receive lump sum financing, in exchange for the provider receiving a percentage of your personal credit card sales. So, even if your credit score is below average, if you have consistent business credit card sales you could still qualify for this product.

During the merchant cash advance application process, the financing provider will be looking for a large number of deposits in small amounts. Therefore, your poor credit score could be overlooked if you meet this requirement.

6. Ask Family or Friends for Money

If you’re in a bind and need immediate financing to keep your business up-and-running, consider asking a friend or family for some cash.

We don’t recommend taking a loan from a loved one, but if you know someone who’s willing to give you money to get by until you can apply for working capital, you can improve your business credit in the meantime. Then, once your credit score increases, you can apply for a business loan or line of credit from an alternative lender!

7. Pay Your Bills on Time

One of the easiest ways to improve your credit score is to pay your bills on or before their due date. Paying bills late can be a contributing factor to why you have a low credit score, so make this a priority moving forward. Below, you’ll find a few ways that you can ensure that you pay your bills on-time.

Set a monthly calendar reminder:If you frequently forget to meet bill deadlines, we suggest setting up calendar notifications that will remind you as the due date approaches.
Refine your budget:If you’re paying bills after their deadlines because you’re short on cash flow, you should improve your business’s budget going forward so that you can afford to pay for monthly expenses.
Utilize apps:There are numerous financial apps that help business owners pay and manage their bills. If you’re interested in this type of technology, check out apps such as Mint, TimelyBills, and Bills Monitor.

By trying these tips, it’ll be easy for you to pay your bills by their due dates, and in turn earn a good credit score.

Business Loans for Poor Credit: Qualifying is Possible

Hopefully this post has provided you with helpful ideas on how to business loan with bad personal credit or business credit! Don’t get discouraged when going through this process, there are lenders out there who will provide loans for small business owners with bad credit history.

If you’ve received a bad credit business loan or have successfully raised your score and been able to get approved for financing, share your top tips with us in the comment section below!

Editor’s Note: This post was updated for accuracy and comprehensiveness in July 2019.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

How to Get a Business Loan

That bank loan you want for your company? Well, the bank is going to want a lot before they give it to you.

Do you find this daunting? Me too. I was really disappointed when I needed my company’s first commercial bank loan to finance receivables of more than $1 million—from well-known distributors no less—and we ended up having to sign a lien on our family home to get the loan.

We said, “Wait, we’re a corporation, why do we need personal guarantees?”

They said, “If you don’t believe in your business, then we don’t either.”

We said “Wait, these are good receivables, you already checked the credit ratings of these distributors, why aren’t they enough?”

They said, “If you don’t believe…(see above).” And at that point I realized the truth in the old cynical joke that says banks will lend you money only if you don’t need it.

One of the first things overly-optimistic entrepreneurs discover as they look for funding is that banks don’t fund business plans. In their defense, it would be against banking law if they did. Banks are dealing with depositors’ money. Would you want your bank to invest your checking account balance in a startup? I wouldn’t. And neither would the U.S. banking regulators.

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So here’s what to expect a bank to ask for when you apply for a commercial loan for your business. There will be occasional exceptions to every rule, of course, but here’s the general rule:

1. Collateral

As I explained above, banks do lend money to startups. One exception to the rule is that the federal Small Business Administration (SBA) has programs that guarantee some portion of startup costs for new businesses so banks can lend them money with the government, reducing the banks’ risk.

So your business has to have hard assets it can pledge to back up a business loan. Banks look very carefully at these assets to make sure they reduce the risk. For example, when you pledge Accounts Receivable to support a commercial loan, the bank will check the major receivables accounts to make sure those companies are solvent; and they will accept only a portion, often 50 or sometimes 75%, of receivables to back a loan. When you get an inventory loan, the bank will accept only a percentage of the inventory and they will kick a lot of tires first, to make sure it isn’t old and obsolete inventory.

The need for collateral also means that most small business owners have to pledge personal assets, usually house equity, to get a business loan.

2. Business plan

There are exceptions, but the vast majority of commercial loan applications require a business plan document. Nowadays it can be short—perhaps even a lean business plan—but banks still want that standard summary of company, product, market, team, and financials.

3. All of your business’s financial details

That includes all current and past loans and debts incurred, all bank accounts, investment accounts, credit card accounts, and of course, supporting information including tax ID numbers, addresses, and complete contact information.

4. Complete details on Accounts Receivable

That includes aging, account-by-account information (for checking their credit), and sales and payment history.

(And if you don’t know what your Accounts Receivable are, then count your blessings. If you had any, you’d know. Or, read our guide to find out.)

5. Complete details on Accounts Payable

That includes most of the same information as for Accounts Receivable and, in addition, they’ll want credit references, companies that sell to your business on account that can vouch for your payment behavior. If you need to know more about Accounts Payable, just read our guide that explains things simply.

6. Complete financial statements, preferably audited or reviewed

The balance sheet has to list all your business assets, liabilities and capital, and the latest balance sheet is the most important. Your Profit and Loss statements should normally go back at least three years, but exceptions can be made, occasionally, if you don’t have enough history, but you do have good credit and assets to pledge as collateral. You’ll also have to supply as much profit and loss history as you have, up to three years back.

Regarding audited statements, having “audited” statements means you’ve paid a few thousand dollars to have a CPA go over them and take some formal responsibility for their accuracy. CPAs get sued over bad audits. The bigger your business, the more likely you’ll have audited statements ready as part of the normal course of business for reasons related to ownership and reporting responsibilities.

Having statements reviewed is a lot cheaper, more like a thousand dollars, because the CPAs who review your statements have way less liability if you got it wrong. Banks won’t always require audited or even reviewed statements because they always require collateral, assets at risk, so they care more about the value of the assets you pledge.

7. All of your personal financial details

This includes social security numbers, net worth, details on assets and liabilities such as your home, vehicles, investment accounts, credit card accounts, auto loans, mortgages, the whole thing.

For businesses with multiple owners, or partnerships, the bank will want financial statements from all of the owners who have significant shares.

And yes, as I implied in the introduction to this article, that’s leading to the personal guarantee. Expect to sign a personal guarantee as part of the loan process.

8. Insurance information

Since it’s all about reducing the risks, banks will often ask newer businesses that depend on the key founders to take out insurance against the deaths of one or more of the founders. And the fine print can direct the payout on death to go to the bank first, to pay off the loan.

9. Copies of past returns

I think this is to prevent multiple sets of books—which I think would be fraud, by the way—but banks want to see the corporate tax returns.

10. Agreement on future ratios

Most commercial loan include what we call loan covenants, in which the company agrees to keep some key ratios—quick ratio, current ratio, debt to equity, for example—within certain defined limits. If your financials fall below those specific levels in the future, then you are technically in default of the loan.

Did you know this article is part of our Small Business Loan Guide and our Bplans Pitch Guide? Everything you need to know about creating your pitch, all in one place.

Need help finding a loan? Check out the Bplans Loan Finder.

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Want to start a business but afraid you can’t get financing? Credit may not be as plentiful as it was before the financial crisis, but loans are still out there for small business owners who do their homework, according to Sabrina Parsons, CEO of Palo Alto Software, which makes software tools to help small businesses track their finances. If you want to launch, expand, or help finance your business, try these steps:

1. Take a test drive.

Before you go through the considerable bureaucratic hassle of applying for a small business loan, you can get a good read as to whether you’ll get one, Parsons says. Visit one of the SBA’s Small Business Development Centers for free guidance as to how best to present your information and whether you’re likely to get a loan.

2. Prepare a business plan and financial documents.

It’ll be tougher to get a loan if your business hasn’t opened its doors yet, Parsons says. If your business is up and running even in a small way, prepare some cash flow sheets that show you understand where the money’s coming from. If you’ve run a successful business in the past, that information will help too. Either way, do take the time to prepare a business plan. “Not some 55-page thing, but something that will show you have a good understanding of your business and market, a high-level strategy, and a financial projection.” Ultimately, she says, a human being will make the yes or no decision on your loan, and without solid documentation the answer will likely be no, even if everything else looks good.

3. Get your personal finances in order.

“Personal background is often a problem,” Parsons notes. That’s because the bank is betting on you just as it would be for a personal loan, so your past credit performance will matter. Now is the time to pull your free credit reports from If there are delinquencies or other negative information that doesn’t belong, dispute them, and try to pay off any outstanding loans, including credit cards. If the problem is that you haven’t used much credit (which can give you a low credit score) take out a credit card or two, use it once a month or so, and pay the bill promptly. Or try another option: Bring in a business partner with better credit than yours.

4. Try a community bank.

“Community banks can be better than big commercial banks,” Parsons says. For one thing, loan officers are likely to have more decision-making power, and are less firmly bound by algorithms than they would be in a large bank. But not all community banks are equal, she says. You want one that is actively pursuing small business customers. Check out the bank’s marketing materials and the financial information on its website to get a clue. “If only 2 percent of their customers are small businesses, that probably won’t work for you,” Parsons says.

5. Consider a line of credit.

With a loan, you get a lump sum from the bank, usually for a specific purpose such as opening a new store or expanding an existing one. You pay it back over time from the increased profits at your new or larger location. A line of credit is more like a credit card: You use it when you need it, for instance if you get a large order from a B2B customer and need to buy materials but won’t have cash till 30 days after you deliver the finished product. A line of credit is better for keeping your business running day-to-day, and easier to obtain as well, Parsons says.

6. Don’t wait till you need it.

The old adage about how banks only lend to those who don’t need their money has some truth to it. More to the point, if you wait till you can’t make payroll it’ll be difficult for the bank to help you since they generally can’t lend to companies at risk of going bankrupt or ceasing operations. Instead, pay close attention to your projections so that you’ll know ahead of time if you’re going to hit a cash crunch. “If you tell the bank ‘Business is really good, but I’m collecting every 60 days instead of every 30 days,’ they’re more likely to extend your credit,” Parsons says.

Too many small business owners wait too long. “Sixty percent of small businesses that fail are profitable when they fail,” she adds. “They just don’t have the cash flow.”

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Compare Small Business Loans

If your business requires a vehicle but you’re short on cash, you will need to obtain a commercial auto loan. Here’s what you should know.

Commercial Auto Loans Explained

Commercial auto loans are used by businesses to buy vehicles needed for work-related operations. That includes such tasks as getting products to customers, completing jobs, and transporting employees, among others. This type of loan is offered by banks, credit unions, finance companies, and alternative lenders. It’s quite similar to a consumer auto loan except that far more documentation is required. These loans are available for new and old vehicles as well as for refinancing existing loans. Technically, you could buy a personal-use vehicle with a commercial car loan, but that would be difficult to secure and would be a red flag for Internal Revenue Service auditors.

Because vehicles are considered depreciating assets and they are expensive to buy, many businesses choose to lease instead. But purchasing could be a good option if your company needs the vehicle long term and wants to write off the depreciation on its tax returns.

When considering commercial auto loan lenders, focus on how much of the cost the lender will cover, interest rates and fees, and the repayment term. Many lenders will cover up to 100% of the cost for a new vehicle. But this may not be the case for used vehicles, and many times lenders won’t finance cars and trucks that are five years old or older because they depreciate too much. The interest rates, fees, and loan term depend on the lender and the various factors that go into determining how much of a risk the investment is.

Commercial Truck Loans

Commercial truck financing usually involves transportation vehicles (semi trucks) or vocational trucks (dump trucks, cement trucks, and other work vehicles). In many cases businesses, such as construction, delivery, waste, and farm companies, need spacious vehicles to transport materials. Companies may not have enough money to finance each truck, so many owners turn to commercial auto loans.

Equipment finance companies claim to give loans for individual trucks but they usually require that you purchase at least three vehicles. Lenders prefer that borrowers buy more than one vehicle to ensure that the business can make enough money to repay the loan in the event of a breakdown or accident. For example, if you have 10 trucks and one breaks down, you still have 90% of your fleet on the road. Conversely, if you have only one truck and it breaks down, you may have zero income until it is fixed. Unless you can prove that you have other means of dependable income, a lender will not look at this situation favorably.

Risk factors for obtaining a loan for trucks include being a new business, having poor credit, being an owner-operator, having low cash reserves, and buying an old truck. New owner-operators tend to have a tough time getting approved for a loan because of a lack of credit and revenue history. Having any of these risk factors can lead to a higher interest rate or a down payment that ranges from 10% to 50%.

Typical Commercial Auto Loan Rates and Terms

In the chart below, we show the typical terms, features, and rates associated with commercial auto loans.

Loan Amount	$5,000 to $250,000
Loan-to-Value Ratio	Up to 100% of vehicle value
Uses	New and used vehicles, refinancing
Interest Rate	1.74% to 18.00%
Fees	May have an application fee or opening fee; down payment may be required
Loan Terms	Up to 120 months

How to Get a Commercial Auto Loan

In order to obtain a commercial auto loan, you must be prepared with not only business documentation but also personal records. The process of securing a loan involves a lot of preparation because you must illustrate your loan needs while assuring the lender that its risk is minimal.

First and foremost, establish the amount of money you have for a down payment, the vehicle you need, and the costs associated with buying the vehicle. Then gather documentation that proves that you are the owner of a business, including business licenses, partnership agreements, and LLC documents. In order to apply under a corporation, you need the articles of incorporation, which must list you as having at least a 20% stake in the company. Other necessary items are your Employer Identification Number (EIN), tax returns, bank statements, and cash flow statements. It is also a good idea to have a loan proposal handy, detailing your business, loan needs, and financial statements.

Many lenders require personal documentation in addition to your business records. This may include your personal credit score and credit history or a personal guarantee, which may be necessary if you have a low business credit score or limited credit history. It reassures the lender that you intend to repay the loan and are committed to your business. Refinancing the vehicle solely under your business is possible after a few years of making timely payments. If you are a sole proprietor and the business is under your Social Security number, you are the borrower and guarantor, meaning that you are personally liable for repaying the loan.

Commercial Auto Loans With Bad Credit

While you can secure a loan despite having bad credit, you’ll pay a price. Lenders will ding you with higher interest rates and severe penalties if you default, and usually require a personal guarantee for the loan. They do this because borrowers who have bad credit often have a history of not paying loans on time or have made multiple unsuccessful loan inquiries. However, if you are able to obtain and repay this type of auto loan, that display of responsibility can help your business’ credit score and history. Generally speaking, we recommend that borrowers evaluate their loan needs while also considering other options to get a vehicle, including leasing or researching local vehicles for sale, provided they have enough cash flow.

Commercial Auto Loans Without a Personal Guarantee

Many business owners try to avoid having to personally guarantee a loan. That’s because if the business is unable to make payments, the lender will go after the owner’s money and assets. But a personal guarantee makes the investment less risky to the lender because it has the reassurance that the loan will be paid. Still, there’s a good chance you can qualify for a commercial car loan without a personal guarantee if you have a high business credit score and you have been in business for a while.

Buying vs. Leasing

While buying a commercial vehicle can make sense for many businesses, leasing is another good option to consider. In the table below, we compare buying and leasing.

Making payments on time and monitoring your credit history are two ways to help you build strong business credit.

How to Get a Business Loan

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If you’ve been denied a small-business loan, it might be because you have bad personal or business credit. Forty-five percent of small-business borrowers who get a “no” from creditors are turned down because of their credit scores, according to the Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia. Borrowers with bad credit might also have higher interest rates, higher insurance premiums and less favorable payment terms with suppliers.

A strong business credit profile doesn’t just help you secure a loan; it’s also important for attracting new business. Unlike with personal credit reports, anyone — including potential customers, partners and suppliers — can look at your business credit report. Those parties look at your report as an employer would an individual’s resume, says Amber Colley, director of sales and partnerships at Dun & Bradstreet, a business credit bureau.

“It’s not just about finances,” Colley says. “It’s about your credibility.”

You can get a small-business loan despite bad personal credit . But if you take steps first to build your business credit, you’ll qualify for lower interest rates, cutting the total cost of your loan.

Here are five steps to build your business credit.

1. Keep your information current with all three credit bureaus

There are several credit bureaus that collect data and create business credit scores, including Dun & Bradstreet, Experian and Equifax. But compared with personal credit scores, which follow the standards set by Fair Isaac Corp. to produce a standard FICO score, business credit scores are much less streamlined. Each business credit bureau has a different formula for calculating scores, and different lenders report different types of data, says Gavin Harding, a senior business consultant at Experian.

Know where your credit stands

Check your free credit report and see your score. Your info updates weekly so you can track changes.

Since you never know which credit bureau your vendors, creditors or potential customers will check, it’s smart to maintain all three. Dun & Bradstreet, for example, allows business owners to update basic business information (such as years in operation or number of employees) and upload financial statements. The more complete your profile, the better, Colley says. For more on how to monitor your score, check out our business credit score guide .

2. Establish trade lines with your suppliers

If you buy supplies, ingredients or other materials from third-party vendors, those purchases could help build your business credit. Many suppliers extend trade credit, which means they allow you to pay several days or weeks after you receive the inventory. If you have this type of accounts-payable relationship, ask your supplier to report your payments to a business credit bureau. Your business credit score will get a boost as long as you stick to the terms of the trade agreement.

You need at least three trade lines to get a Dun & Bradstreet Paydex score, which measures past payment history. Even if you don’t work with a lot of suppliers, Colley suggests setting up trade lines with any small vendor, such as your water or office supplies distributor. If those vendors don’t report to a credit bureau, you can list them as a trade reference on your account, and Dun & Bradstreet will follow up to collect your trade data, Colley says.

3. Make payments to creditors on time or early

Although each credit bureau uses slightly different methods of crunching business credit scores, all of them consider your history of paying creditors. To ensure a good score, make sure your payments are on time or, even better, early. Dun & Bradstreet only assigns perfect scores to those who pay early.

A long credit history tends to weigh favorably, so the sooner you can start establishing business credit, the better. Also, credit utilization is a factor in business credit scores — as it is with personal credit scores. So use your cards and lines of credit, but don’t max them out. Limit your spending to 20% to 30% of your credit limit.

4. Borrow from lenders that report to credit bureaus

Small-business loans can actually boost your business credit if you make all your payments on time and the lender reports to a business credit bureau. But not all lenders do. So if you’re intent on building business credit, ask the lender whether they report before you take out a small-business loan.

Banks typically report to credit bureaus, but if you have bad credit, you probably won’t qualify for a bank loan. Many online small-business lenders — which are more willing to lend to bad-credit borrowers — also report, including OnDeck, Lending Club, Funding Circle, Kabbage and BlueVine. However, lenders including SmartBiz, Lighter Capital, Fundbox and merchant cash advance companies don’t report.

5. Keep your public records clean

In addition to detailing your business’s history of paying creditors, your business credit report will have any public records filed in your business’s name, including bankruptcies, judgments and liens. A judgment is a court ruling; if the ruling is against you in a debt collection lawsuit, it will have a negative affect on your credit score. A lien is a creditor’s legal right to seize your property unless you pay an owed amount, such as an outstanding small-business loan or unpaid taxes.

These negative marks on your business credit report can haunt you. Bankruptcies, for example, stay on your Experian credit score for almost 10 years; tax liens, judgments and collections remain for almost seven years.

How to build business credit: summary

Keep your information current with all three credit bureaus

Establish trade lines with your suppliers

Make payments to creditors on time or early

Borrow from lenders that report to credit bureaus

Entrepreneurs and small business leaders often ask me for advice on navigating the various sources of traditional and online business lending out there (as a CFO, it’s part of what we do).

You may be trying to understand this complex landscape and wondering where to begin or even if you’re ready to start talking to lenders. Here are five things I’ve learned through over a decade of working with startups and small businesses:

1. Plan ahead, Do not wait to apply for cash until you desperately need access to commercial funds. An entrepreneur with no money in the bank is more likely to take a loan at a terrible rate because they did not plan ahead for their cash needs. And having access to enough capital can be a tricky business in the early days: healthy, fast-growing companies will often need to front payroll or marketing dollars while waiting for customers to pay. The lending process at a traditional bank could involve several weeks of applications, reviews, and underwriting, so start before you need the cash. If you can show growth plans and know you’ll benefit from access to funds in the future, now is the time.

2. Get help. Partner with a CFO or local accounting professional to help vet your local banks. They’ve worked with many of the lenders and can help you develop a strong package to bring to the bank and make sure you’re finding the best fit for your company.

3. Go local. Make your first stop your current business bank commercial lender. Or shop around at local banks, who are often hungry to lend and have the best rates on the market. I was able help a recent client get an unsecured $50K Line of Credit at 5% at their local bank by showing healthy financials and a solid growth plan.

4. Keep going. If you aren’t able to get a traditional loan through your local bank, don’t despair. Hit up the SBA. This federal agency has the next cheapest type of funding, and your local bank may even introduce them as an option if the bank cannot offer an unsecured line of credit. As a CFO, I help entrepreneurs apply for SBA loans using smartbizloans.com.

5. Try online. If neither a traditional nor an SBA loan works for you, check out the loan matchmaking site Fundera. I recommend them the most because they work to get you the best offer or rate from the current online lenders as well as banks across the country. Their loan specialists are very helpful and do a great job following up with you during and after the process. A number of my clients have had success closing several types of loans via Fundera at decent rates.

Navigating the lending process can be intimidating, but don’t let that keep you from locating the cash your business needs. Work with a CFO or accounting professional who can assist you with gathering the required documents and creating a solid plan for how to use the funds wisely. When in doubt, get advice and do not fall prey to easy money or predatory business lenders.

Plan ahead, and you’ll be on your way to a small business loan at affordable rates for your business.