How to Apply for a Business Loan

You’re probably looking for a way to improve your company, but you don’t have the funds. The good news is there are many small business loans out there that can provide what you need! Small businesses need financing for a range of reasons, from getting the company up and running to allowing it to grow profitably. A business loan can help your small enterprise achieve its goals while providing you with funds that will last through tough economic times – no matter what they are!

A lot goes into deciding the best course for your business and we realize many small businesses don’t have time themselves to research the options before them. We’ve here to help and offer guidance on applying for a business loan in 4 simple steps.

1. Determine where to apply for a small-business loan

Banks, alternative online lenders, and other sources offer business loans. The best place to apply for a small-business loan will usually be wherever you qualify for the most capital in the shortest amount of time. But the following questions should also help make your decision:

  • How good are your finances? Bank and SBA loans typically offer the most competitive interest rates. Those low rates come with strict qualifications though: You’ll likely need at least two years in business, strong annual revenue, and good credit to qualify for funding. If you have poor credit, your best bet may be to apply for a small-business loan from an online lender.
  • What type of funding do you need? You’ll want the best available loan tailored to your purpose. For example, if you’re buying heavy-duty machinery a lender with dedicated equipment financing may make sense. For ongoing working capital, consider a business line of credit you can draw from as needed.
  • When do you need the capital? If you need financing fast, you may want to prioritize online lenders. These lenders have automated processes that let them review and process applications quickly. If you can wait for more than a few days, SBA loans may offer quicker turnaround times than other federal options. For non-urgent loans with traditional lenders, like banks, you should speak with a loan officer before applying to ensure you meet the qualifications.

2. Organize your application materials

The documentation each lender requires for its small business loan application can vary. Most likely, you will need to provide some form of the following:

  • Business details. These items will range from the basic, like your business’s name, address, and tax ID, to more detailed documentation. For example, a lender may want a business plan or proposal outlining how the loan will be used.
  • Financial statements. These may include documentation of your annual revenue, such as profit and loss statements, plus tax returns and bank account statements for business owners and the business itself.
  • Owner specifics. You may need personal information like the names, Social Security numbers and addresses for anyone who owns more than a certain percentage of your company, typically 20% or 25% depending on the lender or loan.

The SBA’s loan application checklist is a great place to start if you’re not sure what you might need. Government small-business loans typically require more paperwork than other options, so if you have everything the SBA wants, you should be well-prepared for whatever a lender asks for.

3. Fill out your small-business loan application

Before applying for a small-business loan, consider having someone else look over your application, especially if it includes information that could be open to interpretation, such as a business plan. One resource is the Small Business Development Center.

Make sure to double-check that your business loan application includes everything the lender asked for and in the appropriate format. Lenders may have questions as they evaluate your application but by reducing unnecessary back and forth, you’ll get a decision as quickly as possible.

4. Follow instructions to apply

Once everything is in order, how you actually apply for the small-business loan will depend on the lender. Some online lenders let you link your business accounts through their website to qualify for financing. More traditional financial institutions, such as banks and credit unions, may make you apply at a branch or over the phone.

No matter how you submit your application, find out the lender’s typical turnaround time. That way, you’ll know when to expect a decision about whether you’ve been approved.

If you would like to find out how Omni may help you with your business capital needs.  Please call us or click the Apply Now button above to use our simple, online application.