Applying for Business Loans 101

Getting a business loan takes planning, but it doesn’t have to be overwhelming. If you know what lenders are looking for and understand your financing options, you may be able to find a loan that fits your business needs.
One of the first questions many people have about business loans is “Is it hard to get a business loan?” Some online lenders have much lower barriers with higher rates and shorter terms. Meanwhile, traditional banks may have more requirements but offer lower rates and give you more time to pay them back.
There are programs run by the U.S. Small Business Administration, the USDA, or even the state you live in that exist to help you secure funding. Some of these programs can even provide guidance on finding lenders. Be aware that these programs may take several weeks or months to secure a loan for you.
Here’s more on what you need to know when applying for a business loan.
In general, most banks have some combination of requirements for loan approval. This can include:
Loan programs backed by government agencies, such as the U.S. Small Business Administration (SBA), may have additional requirements based on your business type or size.
Your personal credit may play a role in whether you qualify for a business loan—especially if your business is new or doesn’t have an established credit history.
Lenders may ask for a personal guarantee, which means you agree to repay the loan yourself if your business can’t. This is more common if your business is a sole proprietorship or partnership.
In some cases, a business loan could affect your personal credit if payments are missed or if the lender reports activity under your name. For more detail, SoFi explains how business loans may impact personal credit.
Here’s a short list of the most common types of loans:
Getting a business loan isn’t always easy, but it’s more manageable when you know what to expect. Whether you’re applying through a bank, an online lender, or a government-backed program, taking time to prepare can make a big difference. Make sure your business finances are in order, know your credit situation, and choose a loan that fits your goals. If you’re not sure where to start, a small business advisor or local lender may be able to help.
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