How to Get a Business Loan?

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*This business loan calculator assumes a monthly interest rate of 3.3%. Your interest rate may vary based on your application information.

How to Get a Small Business Loan In 5 Steps

The recovering economy has led many small business owners to get smarter about borrowing. It’s important you know how to get a small business loan that fits your needs. In many cases, that means considering alternative business loans, such as private business loans and unsecured business loans.

While the process of applying for a business loan will differ slightly for each company (and depend on the specific kind of loan being applied for), there are a few common steps every business owner should take on their path to receiving business financing. Here’s how to get a business loan in five steps:

  • 1. Determine what the money is needed for.
  • 2. Decide how much your company needs.
  • 3. Know your numbers, including credit score and business information.
  • 4. Choose the right lender.
  • 5. Get ready and apply!

Step 1: Determine what the money is needed for. There are good and bad reasons for business loans. Good reasons include purchasing equipment or real estate, funding long-term software development or compensating for seasonal sales shortages. A bad reason might include acquiring non-essential or frivolous business assets.


Step 2: Decide how much your company needs. Underestimating the amount of money you need can lead to a lack of working capital sooner than planned. Overestimating can make lenders question the business’s viability. With a flexible line of credit, this isn’t as much of a concern; however, having a detailed budget supported by financial projections can be beneficial for your business as well as the lender.


Step 3: Know your numbers. Lenders may still look at personal credit scores as a way to judge the reliability of the principals who are borrowing the money. They’ll also look at factors such as debt-to-income ratio, time in business, industry risk and cash flow. It’s important to understand how each lender will use these scores to make their lending decision.


Step 4: Choose a lender. Research which type of lender is best for your business’s needs.


Commercial banks: Although automobile loans and home mortgage financing are two of the most popular financing products offered by consumer-focused banks, many banks also offer personal loans and business loans.


Region-specific lenders: Local community banks and other lenders have an interest in economic development in a certain geographic or industry area and may give preference to local businesses.

Alternative Lender

Micro business loan and alternative lenders: Crowdfunding and peer-to-peer sites have grown in popularity, in addition to direct lenders like Headway Capital.


Step 5: Apply! While each lender may require different information on your application, you typically will want to have the following documents and figures handy:

  • A business plan that includes the business owners’ resumes**
  • Financial results and projections (profit & loss, balance sheet and cash flow statements)
  • Financial information including two years of tax returns

**Not necessarily required by Headway Capital.

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