Applying for business loans has never been easier. There is no single way to apply for business loans simply because there is a whole industry that offers loans for businesses with different needs and in different situations. Lenders will want you to have done some thoughtful planning before applying. Why does your business need funding? Where is your business headed in the next few years? Importantly, can your business afford to pay back a loan? Even though every lender has different requirements, there are a few general steps to consider when you are thinking about applying for a business loan. Consider Your Funding Needs Before applying for any sort of funding, you should think about how much financing your business needs and why you are seeking funding in the first place. The answer to these questions will decide which lenders you choose to approach. In some cases, like if your business doesn’t exist yet, you may have limited options. In fact, many small business owners tap personal funds or friends and family for startup money. You are likely facing several scenarios—maybe you are in a cash crunch and need a quick infusion of funding to stay open. You might need expensive new equipment to do what your business does better. Ideally, you are looking to expand your business effectively and stably over the next few years, a goal that many business lenders want to help you achieve. Decide on A Small Business Loan That Is Right For You Once you know what your funding goals are, you should consider all of the different loan options available. When they think of business loans, most people think that they come from a bank. Traditional bank loans, like term loans and Small Business Administration (SBA) loans, have high maximum principals, lengthy repayment periods, and fairly low interest rates. However, these lenders usually require that your business has been around for several years with annual revenue above $100,000. Other small business loans, like ACH cash flow loans and invoice factoring, provide quick, short term loans for many small businesses. Some do not even require a hard pull on your credit. While these alternative lenders usually offer smaller loans than banks, they usually have far less stringent requirements. Factors to Consider There are 2 sets of factors to consider when applying for a business loan—what lenders require and what your business goals require. Almost across the board, lenders will look at your personal credit score, the age of your business, and the revenue of your business. For traditional banks, you will probably need a credit score above 720. Your business will have to be at least 2 years old, and your business’s annual revenue will probably have to be more than $100,000. Other lenders are less demanding, but they will usually want you to have a credit score above 600 and a business that has been in operation for a few months at least. You will also generally need to prove that your business is bringing in several thousand dollars per month in revenue. On the other hand, think hard about how you will use a business loan. If you are owed money and need capital fast, you might think about accounts receivable financing, which is based on outstanding, unpaid invoices due to your business. If you have a detailed plan about growing your business over the next few years, a term loan from a bank could be ideal. Lenders want you to succeed because they want to be repaid. However, they also want you to meet their requirements and have a clear idea about how you will use the funding to grow your company. Compile Financial Documents and Information Before applying for funding, you should create a business plan that forecasts how you will utilize any outside financing. You should gather bank statements, business tax returns, and your personal credit report. These documents provide a picture of your business’s financial history. You should also include the value of any assets related to your business—these can be used as collateral for the loan. Schedule Meetings If you believe a term loan or SBA loan from a bank is your best option, you should gather all of the pertinent documentation and set up an appointment with a banker. You can usually start the application on a bank’s website and move from there, although banks usually require 2–3 months to make a decision on your application. Apply Online In Minutes With online lending platforms like Lendio, you can start applying for loans quickly and easily in as little as 15 minutes. After a soft pull on your credit, Lendio will inform you of the loans that your business qualifies for and how to start that process. Online, you can see all the different options available for you and your business situation beyond basic term loans.