Table of Contents

  • 8 Steps to Getting Your First Business Loan
  • How to Get a Small Business Loan Online
  • The Pros and Cons
  • Simplifying the Loan Application Process

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Are you on the hunt for a small business loan? You’re not alone. Around 40% of business owners in the U.S. apply for a business loan and receive funding each year.

But the question remains: How do you apply for and get a small business loan?

Securing a small business loan at the best rates isn’t as hard as you think. It all starts with finding the right financing option for your niche.

8 Steps to Getting Your First Business Loan

There’s research and due diligence that’s incumbent upon any business loan applicant if they want a loan that works for them now and in the future.

Far too often, business owners get impatient when trying to get a small business loan and jump at the first opportunity. That’s a good way to get the wrong financing deal.  

After all, there are few aspects of business ownership more important than applying for your first business loan. Follow 8 steps to make sure that doesn’t happen to you:

Loan Application Checklist 

  1. Determine whether a loan is truly necessary
  2. Check your creditworthiness
  3. Weigh your options
  4. Prep your financial records
  5. Choose a loan type
  6. Assemble the application
  7. Make your pitch
  8. Wait for approval

Step 1: Should You Get a Business Loan? 

So, you’re questioning whether applying for a loan is right for your business. If this sounds like you, stop and determine exactly why you believe you need outside funding. Do you require a loan to start your small business or manage its daily expenses? Or, do you need capital to scale the business or simply have a safety cushion to fall back on?

The reason you apply for a loan tells you a lot about what your options are, and how you should go about navigating them. For instance, if you need a loan for startup capital, you might be better suited for equity financing.

There’s a world of financing options out there for those applying for a small business loan. Our advice is to take a critical look in the mirror and ask yourself whether taking out a loan is an absolute must. If it is, then you can start shopping around.

Step 2:  Start Searching for Small Business Financing

Once you’ve decided a loan is both necessary and in your business’s best interest, then you can start searching for the best place to get a small business loan. Luckily, you can apply for a business loan online just as easily as in person (often easier). But before you rush to submit an application, start by laying the foundation.

Make sure your business’s financials are organized before you apply for your first business loan. Taking out that first business loan is a major checkpoint in your company’s growth, so make sure it’s the right time to apply before pulling the trigger.

To do this, confirm your company is operating with a high credit score and positive financial metrics on its balance sheet. These ensure you’re more likely to get approved and at more competitive rates.

While it’s possible to get a small business loan with bad credit, the terms won’t be as favorable. The worse your business’s financial condition, the more expensive your loan will be. For this reason, you should make sure your company is in the black and not operating at a loss at the time of application.

Small business tip: If your personal credit score is low (580 or below), you should start building positive credit as quickly as possible to bolster your chances of getting the loan approved. Many lenders look to your own creditworthiness when assessing your business’s fundability. Here’s how you can start repairing your credit today. 

How Much Funding Do You Need?

Most business owners interested in applying for funding ask, “How much financing can I get?”   

Instead, ask yourself how much you really need to borrow. If you only have a vague idea of how much your company requires to get through its short-term expenses or upcoming capital project, you may end up borrowing (and paying interest on) more than you need.

On the other hand, some business owners are too conservative when it comes to asking for a larger or longer-term loan. No matter how high you think your desired principal is, you should always pitch the idea to the lender.

If you underestimate the amount of capital you need, you may end up seriously jeopardizing the financial sustainability of your company. Be sure you know what you’re asking for and what you need to make this investment successful.

Small business tip: Try using our business loan calculators to determine how much your loan may cost and see what you can afford.

Step 3: Know the Score

Not all small businesses are equal. There are many metrics and scores that separate trustworthy businesses from those who are riskier for lenders. If you want to get approved for an affordable business loan, you need lenders to put your business in the first category.

Business credit scores are a consideration for lenders, but it takes time for a small business to establish a strong credit rating, so most lenders also consider other qualifications and guarantees (some even use your personal credit score).

If you apply to get a small business loan with bad credit, it will impact your rates and overall financing costs. It’s important to build your credit score by maintaining lines of credit, making payments on time (or early) and paying off debts.  

Another important metric creditors use to determine creditworthiness is your debt-to-income (DTI) ratio. This metric helps lenders measure your business’s overall financial health and ability to repay additional debts.

If your debt-to-income ratio is too high (under 35% is preferred, but ratios as high as 50% can still be OK), most creditors may deem you unfit to take out a new loan.

In short, your creditworthiness is an all-important aspect of your business loan application that, in many cases, will make or break your eligibility for a loan. Plus, once your creditworthiness is lost, it’s hard to restore, so make sure your debts don’t become unmanageable.

Step 4: Choose the Right Lender

New entrepreneurs often assume that they have to get a small business loan from a large, national bank. However, you’re more likely to get approved if you solicit a smaller, regional bank that has a history of taking on smaller clients.

Plus, there are other options such as credit unions, not-for-profit financiers and alternative lenders . Today, you can get a small business loan online through lending marketplaces such as Fast Capital 360.

In search of fast, affordable funding?


Make sure you review a variety of funding options.and research where to get a small business loan. This can include:

  • National banks (e.g. Wells Fargo, JPMorgan Chase, etc.)
  • Regional banks (e.g. small local chains)
  • Non-profit lenders
  • Online lenders (e.g. Fast Capital 360)
  • Microlenders
  • Credit unions

Step 5: Choose What Kind of Business Loan Is Right 

Far too often, new business owners apply for a long-term bank loan without considering the alternatives. The truth is, locking down a long-term loan right off the bat is difficult for a startup business. Sometimes you don’t have what’s required to get a small business loan until you’ve been in business for a while. 

Even if you do get approved, these loans provide your business with a secure stream of capital but can dictate your finances for years to come.

Unless your business has long-term capital expenses that cannot be covered by other means, another funding option may be a better choice. Below, we’ve broken down four of the most popular financing options for small businesses. One of these might suit your goals better than a bank loan.

SBA Loans

An SBA loan is a secured loan backed by the U.S. Small Business Administration. SBA loans are low-interest financing solutions that are technically provided by commercial banks and non-profit lenders rather than the SBA itself. 

When applying for a regular term loan at a bank, you will need to put up assets to secure the loan. If you need to get a small business loan without collateral – such as real property, cash or inventory – the bank will likely consider your application too risky. This is where the SBA comes in, providing the capital guarantee needed to secure the loan on your behalf.

Since SBA loans are generally less expensive than other alternatives to regular term loans, they’re one of the most cost-effective ways to fund a small business.

SBA loans can be competitive to get approved for, though, so be ready to meet the strict qualifying conditions that bar some companies from applying.

Do you qualify?

  • In business 2 or more years
  • Annual revenue of at least $75,000
  • Credit score of 650+

Business Line of Credit

Business lines of credit are a convenient, take-what-you-need option for financing a new company. Unlike traditional loans, a business line of credit offers accessible funding for companies that need an indefinite sum of capital to get them through a cash crunch or major expense.

A business credit line allows better control over your business’s debt and can be easier to get than a regular small business loan. Acting as a reserve source of cash to be used whenever needed, the line of credit can also supplement a traditional loan.

Compared to loans and equity financing options, business lines of credit offer the following advantages:

  • Flexible cash flow management
  • Control the funds
  • Lower interest rates and higher limits than most credit cards

Do you qualify?

  • In business 6+ months
  • Annual revenue of at least $160,000
  • Credit score of 575+

Invoice Financing

A form of accounts receivable financing, invoice factoring involves the pledging of unpaid invoices as collateral in exchange for cash.  

Companies that need fast cash for short-term expenses often turn to invoice financing if they have high-value outstanding invoices yet to be paid.

Most banks and creditors offer between 75-90% of the invoice face value. The cash is then advanced to the borrower and the remaining balance is remitted after the invoice is paid in full, minus fees.

Those looking to get a small business loan with bad credit can take advantage of invoice financing, as the creditworthiness of your customers is weighted more heavily than your business’s own financial health.

Do you qualify?

  • In business 1+ years
  • Annual revenue of at least $150,000
  • Credit score of 600+

Equipment Financing

If your business operates in an industry that’s reliant on equipment, such as the medical or construction industries, you may be eligible for equipment financing. To help purchase the expensive equipment needed to run your business, banks and other creditors can advance you up to 100 percent of the value of the equipment, which you then repay with interest.

One of the main benefits of equipment financing is lower interest rates. Since the equipment generally secures the loan itself, interest rates don’t skyrocket because you don’t have collateral on hand.

Do you qualify?

  • In business 2+ years
  • Annual revenue of at least $160,000
  • Credit score of 620+

Small business tip: If you need working capital for expenses other than equipment and want to get a small business loan without collateral, there are other options. Unsecured loans can get you the funding you need. 

Step 6: Completing Your Loan Application

Now that you’ve narrowed down the type of loan or financing option that’s right for you, you’re ready to move on to the process of applying. You’ll need to go to the lender and begin the application. Generally, a loan officer will be your first point of contact and go-to for all things related to your loan.

Some online lenders provide web access to applications and business advisors to help with this stage. In that case, you may simply be able to speak to an advisor over the phone to complete the process. For more on how to do this, skip steps 7 and 8 and go right to “Applying for a Business Loan Online.

Meeting with a loan officer, likely face-to-face, will be a critical step in acquiring your loan. Few lenders will be willing to grant you a loan unless they have gotten to know you first and have had the chance to evaluate your company

Collecting Your Papers

You should never show up empty-handed when heading to a meeting to get a small business loan from a bank. Make sure you bring all the documents needed to identify yourself and validate your relationship to the business, including:

  • A piece of government ID
  • Business license and permits
  • Proof of ownership

Although the first item is self-explanatory, the bottom two may need some explanation.

The business licenses and permits required will vary by industry and the state in which your company is headquartered. All federal business licenses can be found on the SBA database. However, most federal-level licenses are issued by the U.S. Department of Agriculture, the Bureau of Alcohol, Tobacco, Firearms and Explosives or the Alcohol and Tobacco Tax and Trade Bureau. Be sure to look up your state’s local permits and licenses, too.

Last, you’ll need to provide proof that you are, indeed, the lawful owner of the company. For this, you’ll need a copy of any of the following documents:

  • Articles of incorporation (if applicable)
  • Owner’s tax return, including Schedule C
  • The DBA with owner’s name attached
  • Stock ownership documents (if applicable)
  • IRS form K-1
  • Company stock certificates

Step 7: Making Your Case

Once your application is signed, sealed and delivered, you should prepare to meet face-to-face with your financial institution’s loan officer. This is the representative who you’ll be “selling” your loan application to, so to speak.

During this meeting, you’ll pitch your case for why your business can be trusted with the money by explaining its intent. You could follow all of the other tips for getting a small business loan, only to be denied because of a bad pitch.

While nobody expects you to piece together a full PowerPoint presentation with infographics, clip art and animations, you are expected to come with a rehearsed pitch and organized business plan.

Using visual aids when needed, give yourself 10-15 minutes to go over your planned capital expenses and a roadmap to profitability.

The key to a successful pitch is to keep your message short and sweet. Nothing spells shoddy management like a rambling, unfocused business plan that doesn’t clearly show key financial forecasts for the next 2-3 years.

Your presentation should start with an executive summary that quickly states main talking points and your company’s competitive advantage.

Step 8: Wait for Approval

Where you apply will determine how long it’ll take to hear back from the creditor. After you file your application and present your pitch, it may take months to get a small business loan from a bank, especially a large, national one.

Keep in mind that national banks have large corporate bureaucracies that can sometimes be slow-moving. Don’t be surprised if it takes two months or longer to get a response, especially if it’s an SBA loan.

Smaller, regional banks that brand themselves on helping small businesses tend to take significantly less time to process small business loan applications. In most cases, these local lenders are actively seeking out small business loans to add to their books.

These institutions aren’t as interested in large enterprises that can put up hundreds of thousands in collateral. Instead, it’s common for many regional banks to cater to those who need to get a loan to start a small business or those seeking a business loan without collateral.

If you apply for an online business loan, you could be approved much faster. Many online lenders that offer merchant cash advances, cash flow loans and working capital loans specialize in reviewing loan applications within hours of receiving them.

Applying online with a platform that specializes in facilitating these kinds of loans can offer real advantages in terms of convenience and ease of financing.

How to Get a Small Business Loan Online

Today, there’s no longer any need to walk through the doors of a brick-and-mortar bank or credit union and apply for a loan in person.

Today, you can get a small business loan online from the comfort of your home thanks to lenders that are providing a safe and competitive alternative to traditional commercial financiers. 

If you’re wondering where to get a small business loan and aren’t familiar with this process, you could realize it’s the perfect match for your situation.

Are Online Business Loans Safe?

Like the name suggests, online business loans are repayable loans that are applied for and received through the Internet. From end-to-end, online business loans are managed and reviewed  electronically using secure web portals that protect your data through encryption, keeping it confidential and safe from security threats.

 

When it comes to security, major strides have been taken in recent years to make online banking and lending as safe as traditional lending. 

 

For instance, Secure Sockets Layer (SSL) encryption is now a standard technology that makes the link between the web server and your browser highly threat-resistant. It ensures that all data and messaging between the lender and borrower is kept private.

 

Further, the TRUST eCertified Privacy Certificate attests that lenders or platforms have taken steps to ensure that the highest data privacy standards are upheld, and all collected data is kept confidential and secure.

 

Regardless, to keep your data secure, exercise due diligence and thoroughly research any lender or platform you use to apply for an online business loan.

Choosing an Online Business Loan Type

There are several options available to you if you’re interested in applying for an online business loan. A few of the options we covered earlier are some of the most common financing products that you can find online, including:

  • SBA loans
  • Business lines of credit
  • Invoice financing
  • Equipment financing

There are a few other options available online, and they both offer distinct benefits for borrowers with good credit and owners looking to get a small business loan with bad credit.

Short-Term Loans

Short-term loans are a great choice if you need quick funding, but don’t want to tie up your future expenses. 

They’re structured similarly to long-term loans, but are repaid over 3-18 months. You can still borrow medium-to-large amounts (up to $500,000) but be aware that the shorter repayment terms can often mean higher monthly payments.

Do you qualify?

  • In business for 1+ years
  • Annual revenue of at least $75,000
  • Credit score of 540+

Merchant Cash Advances

Another option when it comes to online borrowing is taking out a merchant cash advance. These loan types involve a lump sum cash infusion issued in return for a portion of the company’s sales.

Most online merchant cash advances require a minimum credit score of 500 or higher. Typically, online lenders issue merchant cash advances in the range of $3,000- $500,000, depending on your revenues and what you have the ability to repay.

Do you qualify?

  • In business for 6+ months
  • Annual revenue of at least $75,000
  • Credit score of 500+

Find the loan that’s right for you.

The Pros and Cons of Online Business Loans

There are a host of benefits when it comes to getting a small business loan online. But, like all things, it has its share of trade-offs. To get the full picture, make sure you check over both the advantages and disadvantages associated with applying for an online business loan.

Pros

Ask anyone who’s ever applied for an online business loan, and they’ll tell you that they’re far more convenient and expedient than the traditional application process.

✔ At a brick-and-mortar bank, it might take upwards of a month for your application to be reviewed, but online lenders can process a loan application in as little as a day.

✔ For businesses going through a cash crunch, online financing provides accelerated access to cash. If you’re in dire need of cash, you can even get approved for some online business financing the same day that you apply — however, usually at a higher cost.

✔ The wide variety of options online borrowers can choose from adds a degree of customization that traditional lenders rarely offer.

✔ Between SBA loans, merchant cash advances, short-term loans and more, there are online business funding options that suit every business’s needs and unique challenges.

Cons

Expedited funding is rarely cheap. If you need cash in only a few days, an online business loan or cash advance is in your best interest, but may translate to higher annual percentage rates (APRs).

Another trade-off is that online business loans sometimes come with shorter repayment terms. In other words, in exchange for greater convenience, online business loans need to be repaid faster than a regular business loan, sometimes within a couple months.

It’s also important to carefully vet online lenders to ensure that they don’t tack on any hidden fees or terms.

Application Process

Once you’ve narrowed down which type of online business loan you want, you can start the application process by visiting the website of the lender you wish to apply through.

Typically, online lenders require applicants to contribute the following information:

  • Income and annual revenue information (often in the form of a bank statement)
  • Social Security number
  • Business name and legal name
  • Business tax identification number
  • Personal contact information

Once the application is filed through the lender’s web portal, the waiting game begins. Fortunately, most online small business loans have a very short turnaround time, or, in some cases, they can be approved the same day.

After you’re approved for the business loan, funding will be transferred to your company bank account in as little as 24 hours.

The speed at which you receive funding will depend on the policy of the lender. On some platforms, borrowers can log into their account through the lender’s web portal to check the approval and deposit status of their loan.

The Fast Capital 360 Application Process

Step 1: Tell us about your business.

Fill out a few basic questions about your business so that we can connect you with the best lenders.

 

Step 2: Tell us about you.

We need to learn about you so we can determine your eligibility without impacting your credit score.

 

Step 3: Connect your bank account.

Your revenue data enables us to match you to funding opportunities at the speed of modern business.

 

Step 4: Get funded.

Funds can be deposited into your bank account as soon as the same day.

Simplifying the Loan Application Process

Although applying can seem overwhelming, following the above tips for getting a small business loan will make it easier. With the speed and accessibility of secure online business loans, it’s now simpler than ever to get approved for financing on your terms.

The key to a successful loan application is to find a loan option that works best for you. Since no two businesses are the same, yours will have its unique needs and challenges.

Now that you know how to get a small business loan, it’s time to apply. If you connect with the right lender for the right kind of financing, your business will be set up for success today and in the years ahead.

How much can my business qualify for?

Estimate My Terms

Apply to multiple lenders with just one application.

Learn More