The most important thing to start with when you’re considering applying for a business loan is research. If you’re looking for a loan backed by the Small Business Administration, it could take you months. But by taking your time and understanding all the details, you’ll save time and money and improve your chances of getting the loan.
Check Where to Apply
Look for banks or online lenders that offer business loans. Check where you can get the lowest interest rate. But low-interest rates may come with certain business requirements and need you to have good credit. Make sure you’re borrowing from a lender that understands or specializes in your business. Plan ahead so you can prepare and not be caught without the funding you need at the last minute. Online lenders tend to be faster but may charge more. SBA Express loans may also offer the quick turnaround time needed in an emergency. You may even consider applying with multiple lenders to meet your needs.
Application Details
Lenders will need documentation before sanctioning a loan. Get documents that show your business’s name, address, and tax ID at a minimum. You may also be asked for a business plan or a proposal that outlines how you plan on using the loan. You’ll also need financial statements like profit & loss statements, tax returns, and bank account statements of the business and its owners. Speaking of owners, their names, social security numbers, and addresses will be needed for anyone who owns over 20% of the company.
Review Your Application
Have someone look over your application before applying for the loan. A good place would be the Small Business Development Center (SBDC). These are local organizations that have federal government support and have qualified business professionals that offer help with running a business and getting financed. Ensure your application contains everything that the lender requests.
Follow the Lender’s Instructions
The lender will share details on how to apply for the loan. Traditional lenders like banks as well as credit unions may ask that you apply at their branch. Ask the lender how long they usually take to come back with a decision so you know when you can expect to hear from them.