How to Get a Small Business Loan

Kody Wirth

5 min. read

Updated January 4, 2024

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Considering applying for a business loan?

While it is one of the most common small business funding options, it is also one of the most complicated. Each lender has different qualifications, loan terms, and processes to navigate.

However, by understanding the basics of the loan application process, knowing what lenders are looking for, and what to prepare—you can improve your chances of securing a loan.

In this guide we’ll walk you through how to apply, what documents you need, and common questions that may arise as you pursue a loan.

What to know when applying for a business loan

There’s a lot that goes into applying for a business loan. You need to decide on the type of loan you’ll pursue, determine if you qualify for specific loan amounts, compare lenders, and gather all necessary application materials.

But those are just the basic steps. Here is everything else you should know when applying for a business loan.

How to prepare your business loan application

Before you set foot in a bank or begin the process of filling out a loan application, there are a few key things you should do to set yourself up for success.

10 things the bank will ask for when you need a business loan

A bank needs a lot upfront before deciding to lend you money. And while there may be exceptions, these are the most common things you’ll need to share with your potential lender.

What lenders look for in a business plan

Hopefully, you have a business plan already if you’re pursuing a bank loan. If you don’t, or it’s been a while since it’s been updated— you’ll want to spend most of your time on the sections lenders consider.

How to correctly use collateral to apply for a business loan

Collateral is a piece of property pledged by a borrower to help secure a loan. The key is knowing how to leverage collateral effectively to make you a less risky borrower and open up better loan options.

When and why to sign a personal guarantee

A personal guarantee is a provision in loan agreements requiring an owner or member of an executive team to be personally responsible to repay the loan. Here’s when and why you should or should not sign one.

Know your chances of securing a loan

While it’s impossible to accurately predict if you’ll secure a loan there are a handful of factors to review that can give you a better idea of your chances.

Tips to secure a business loan from a banking executive

Still unsure if you’ll actually get that business loan? Learn how to improve your chances from someone with years of experience and inside knowledge of the lending process.

How to handle business loan rejection

Unfortunately, there will be times when you simply cannot secure a loan. That doesn’t mean you should give up. Instead, learn how to handle business loan rejection and improve your chances when you try again.

Common questions about business loans

Knowing how to apply for a small business loan doesn’t mean you’ll know everything about the application process for every lender. You likely still have some questions. Luckily, we have answers.

What are the challenges of getting a business loan?

Like anything involved in starting or growing a business, there are common challenges to acknowledge and overcome. Here are the hurdles to expect when pursuing a loan.

Are there things to avoid when getting a business loan?

There are specific things that you should and shouldn’t do to get a loan. Aside from the basics like not applying without a business plan here are five additional things to avoid.

Can you get a business loan with bad credit?

The short answer is yes, it is possible to get a loan with bad credit. It won’t be easy and you should take the time to understand why credit matters and how to approach getting a loan with less-than-stellar credit.

Are credit unions a better option for small businesses?

The lending institution you choose can impact your interest rate, loan terms, monthly payment, etc. While you may be drawn to larger banks—you will likely find credit unions to be a more attractive option.

What will loan officers ask about if it’s a seasonal business?

A loan can help seasonal businesses stay on top of their cash flow and better prepare to grow during the busy season. However, there are unique questions that lenders will have that you’ll need to be ready to answer.

What’s the difference between asset-based and traditional bank lending?

Asset-based lending allows you to leverage physical assets as collateral to help you get a loan, while traditional lending evaluates your operations and projected cash flow to determine if you’re qualified.

Should you avoid business payday loans?

Payday loans may seem like a simple and easy solution to get quick funding for your business. However, under that speed and lack of red tape are predatory lending practices that can sink your business.

Are you making smart borrowing decisions?

Do you know how much you can afford to borrow? Or what type of business loan to consider? Find out the answers to these small business borrowing questions and more from members of the SBDC and SCORE.

Small business loan templates and tools

Resources to help you prepare to apply for a business loan and pitch to lenders.

Free business plan template

Showcase your business structure, performance, and potential with a lender-ready and SBA-approved business plan.

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Plan and pitch with LivePlan

Create and share your plan, pitch, and financial forecasts with a single powerful tool.

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Free pitch deck template

Impress lenders with visuals to back up your business plan and loan application.

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Kody Wirth

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

How to Get a Small Business Loan

What to know when applying for a business loan

How to prepare your business loan application