What Does It Really Take to Get a Small-Business Loan?

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(Newswire.net — March 26, 2019) — When building a business, most of the time, it is almost impossible to grow it without funds coming from external sources. You will need new equipment, open a store, and expand your manpower in order to increase sales and the profit of your company.

Nevertheless, being a startup also means that your profit is not enough to cover the expansion financially. But of course, no expansion keeps your business from increasing its revenue; hence, you will really need financial help. This is when small-business loans can help you.

But, what does it really take to get a small-business loan? This article will give you a summary of the factors that will help you secure that small-business loan. Here are some sound advice and insights on the process concerning the loan.

Understanding the Various Types of Loans for Small Business

Small business loans come in different types. The type of loan you need depends on the amount you need to loan, the payment terms, length of loan, and your type of business. Types of small-business loans include small business line of credit, accounts receivable financing, working capital loans, term loans, Small Business Administration or SBA loans, equipment loans, and credit card loans.

Choosing a Lender

Small business loans can be obtained from a number of lender types. For instance, you can get a small-business loan from a direct online lender that allows quick and easy processing online. However, you should be wary with the lending company you are dealing with. Nonetheless, there are reputable online lenders that can provide fast loans without much of a hassle.

If you are not comfortable transacting with online lenders, you can always go to your trusted commercial banks. However, expect a more rigorous and slower process. In case commercial banks is not an option, you may also try applying for a loan from local community banks and peer-to-peer sites that specialize in lending. Of course, there are the bank lenders with SBA guarantees that typically offer a more appealing term.

What Does It Really Take to Get a Small-Business Loan: Eligibility Criteria

Lenders judge your application based on several eligibility criteria. They look on the borrower’s credit score and risk profile. They will also make a thorough study on your outstanding loans, credit card payments, vendor contracts, and cash flow. This information will help them determine if you are capable of repaying your loan.

Furthermore, the lenders will have to review your business assets like cash on hand and accounts receivable. A good asset base will earn you good points, giving you higher probability that your loan will get approved. In addition, the time in the industry will also be considered. Most lenders favor businesses that have been in the industry for years. They also favor those with professional ventures or investors.

Are Your Financial Statements In Order?

Regardless of the loan type or size, it is not unusual for lenders to review your financial statements, including your business accounting records, cash flow statements, income statements, loss statements, and balance sheet. Therefore, you must make sure that your financial statements are correct, precise and complete. Preferably, the statements must be prepared and audited by a CPA or certified public accountant, but this could be a costly option. One alternative is to get a CPA to review the financial statements, which is much cheaper.

Of course, you’ll also need to prepare several important documents like Federal Tax ID, legal structure of your business, projected financial statements, formal copy of loan amount, business plan, credit report, and tax returns among others. Also, when you state the amount of loan you want, expect the lender to ask how you will use the money and what collateral can you possibly offer.


There are so much more to do in order to get a lender grant you a small-business loan. The bottomline is to do the best you can do and meet the requirements of the lender. You may be a small company needing their help and by taking funding options into consideration, your small business is more likely to have a boost. But, before doing so, make sure that you are planning for expansion because of the right reasons and not just for the sake of expanding.