Customer small business financing solutions delivered through a single, online application.
Loan Types
Free access to multiple funding solutions
See funding solutions from 75+ nationwide lenders with a single application.
Apply for financing, track your business cashflow, and more with a single lendio account.
Home Business Loans Business Loans Guide A Guide To First-Time Business Loans
When you’re running a small business, hard work will only get you so far—you also need access to capital. Unfortunately, insufficient cash flow is one of the biggest struggles most business owners have.
That’s why business loans are a great option for small business owners. But if you’ve never applied for a business loan before, you may find the process intimidating.
And that makes sense because many people make the process seem much harder than it actually is. Let’s look at how you can apply for and receive a first-time small business loan with as little stress as possible.
Once you know what kind of loan you need, it’s time to start the application process. Let’s look at five steps you’ll take to apply for a first-time small business loan.
This important step is one you don’t want to skip.
Think about your purpose or goal for getting a business loan. You may be starting a new business or growing an existing one. Or you could be purchasing a key piece of equipment, refinancing existing business debt, or covering your day-to-day operating expenses.
Considering your reasons for seeking a business loan matters because it can give you clarity on how much you need to borrow, which type of loan may be best suited to your purposes, and whether a loan is the best financing option.
Before applying, you need to figure out what you can reasonably afford to borrow. Regardless of the type of loan you take out, you’ll have to repay the funds with interest over time.
If you borrow too much, the payments could become a financial burden for your business. This could cause cash flow issues and other problems in your business. If you’re unsure what you can afford to borrow, you may find it helpful to use a small business loan calculator.
This calculator helps you break down the monthly costs for taking out various types of loans. For instance, let’s say you took out a $50,000 business term loan with a two-year repayment term and an annual rate of 10%. In this situation, your monthly payments would be $2,307.25.
Before you can apply for a small business loan, you need to figure out what kind of loan you need. Here are some of the most popular types of small business loans:
At this point, you’re ready to apply for the loan. And contrary to popular opinion, you don’t need to check your credit score first or gather all your business documents right from the get-go. When you apply through Lendio’s 15-minute application, you’ll only need the following:
You’ll also be asked to provide:
One of the most important criteria lenders consider for business loan approvals is your credit profile.
Generally, the stronger your credit scores, the more likely you are to be approved for a loan. A good credit score can also result in a lower interest rate on what you borrow.
Lendio will do an initial soft pull of your credit score that won’t impact your credit. Some lenders may also do a hard pull of your credit score later in the process.
After you’ve started the application process, your lender will need additional documentation. The extent of this documentation depends on the type of loan you’re applying for. For instance, an SBA loan will require far more documentation than a business credit card.
Being prepared is great, but we’re guessing you don’t want to do more work than you absolutely have to. So it’s best to wait and see what your lender needs before gathering bank statements, business plans, and other documents.
Examples of key documents lenders may want to see include:
If you’re taking out a small business loan, you’ll need to decide whether you want a secured or unsecured loan. If a loan is secured, that means you put down some type of collateral on the loan.
For instance, you could use property, equipment, or other business assets to secure the loan. In comparison, unsecured loans don’t have any collateral requirements.
Putting down collateral can be risky because if you default on the loan, your lender will seize your business assets. But putting down collateral could make it easier to qualify for a higher loan amount or a lower interest rate.
And finally, before you close on the loan and receive the funding, you need to compare your options among various lenders. This is the best way to ensure you get the best rates and terms on your small business loan.
One of the easiest ways to compare your lending options is by using a service like Lendio. When you apply through Lendio, you’ll submit an online application that takes 15 minutes or less to complete.
Once you’ve completed the application, you’ll see loan options for over 75 lenders in our network. And once you’ve selected a lender and been approved for the loan, you could receive the funds in as little as 24 hours.
A small business loan can provide the cash flow you need to fund daily business activities, and it’s always better to apply for a loan before you desperately need the funds. Fortunately, applying for a loan isn’t as difficult as many people would have you believe. If you’re ready to get started, you can use Lendio to compare options for a small business loan.
Applying is free and won’t impact your credit.
For the past five years, she's dedicated more than 10,000 hours of research and writing to more than 2,000 articles about personal finance topics, including building credit, mortgages, and personal and student loans.
Subscribe to our weekly newsletter for industry news and business strategies and tips
Subscribe to our weekly newsletter for industry news and business strategies and tips.