To get a small business loan, you can follow these key steps:
- Decide how much money you need and the purpose of the loan (e.g., startup capital, working capital, equipment purchase, expansion).
- Determine if you qualify for a loan by reviewing your business qualifications such as revenue, credit score, years in business, and collateral availability.
- Compare lenders and loan types:
- Banks typically offer the best rates and terms but often require more established businesses with strong credit and financial history.
- Government-backed loans, such as those offered through the U.S. Small Business Administration (SBA), provide lower rates and favorable terms but have strict requirements.
- Online lenders offer easier access and faster funding but usually at higher interest rates.
- Gather your application materials, which typically include:
- Business information: name, address, EIN, business plan.
- Financial statements: tax returns, profit and loss statements, balance sheets.
- Personal information about owners.
- Collateral documentation (if required).
- Personal guarantees.
- Submit your loan application either online, by phone, or in-branch depending on the lender.
- Review the loan agreement carefully once approved, clarify any questions, sign, then receive your funds.
You can also seek help from Small Business Development Centers or SCORE for application review and legal assistance. SBA loans are popular and backed by the government, offering options like the 7(a) loan program for general financing and the 504 loan program for real estate or equipment. Overall, preparation and choosing the right lender and loan type increase your chances of getting approved for a small business loan.
