How to Get a Company Loan: Everything You Need to Know to Secure Financing for Your Business

Jordan Brooks

Jordan Brooks

— 4 min read
A diverse group of professionals collaborating in an office meeting, showcasing teamwork and partnership.

```html

Estimated Reading Time

10 minutes

Key Takeaways

  • It's important to know what business loan requirements are needed when looking for a business loan.
  • There are different types of business loans available to serve a wide variety of needs.
  • The cost of borrowing is influenced by rates and terms.
  • Selecting the right lender can maximize your loan terms and approval odds.
  • Particular attention should be paid to small business and women-owned business.

Table of Contents

Body Content

Business Loan Eligibility

Business loan eligibility is a set of criteria which your business must meet to qualify for business finance. These will differ between lenders but they are generally similar.

What Determines Eligibility?

To get approved for a business loan, you typically need to have a good business purpose and show that you can repay the loan. Here’s what lenders generally consider:

  • Credit Score and History: Lenders usually take your personal credit score into account before approving your loan.
  • Business Age: Existing businesses may have an easier qualifying process than startups.
  • Income: Steady income to pay the loan.
  • Financial Papers: Bank records, paystubs, and tax filings.

Not all types of loans require an excellent or even a good credit score — in fact, businesses with poor credit still have access to loans, especially from the SBA.

How to Get a Business Loan

There are several steps you can follow to apply for a business loan to ensure the process is as smooth and painless as possible.

How to apply

  • How much you want to borrow: Do some math and determine your exact funding amount before applying.
  • Pull Your Credit Files: Review and verify your personal and business credit reports.
  • Compare Loan Options: Compare different lenders and loan types to find the best fit.
  • Collect Documents: Have all your documents ready before you start the application process.
  • Finish the Application: Submit all the necessary information online or at an office.

What Documentation Do I Need

Most lenders need to see the following documentation:

  • Business bank statements
  • Financial statements (balance sheet and income statement)
  • Business tax returns
  • Business licenses and permits
  • Proof of business formation
  • Legal documents
  • Business plan
  • Credit reports
  • Budget projections
  • Identification (driver’s license or passport)

The process of reviewing your application, called “underwriting,” could take days for some and many months for others, depending on the lender and type of loan. For further instruction, go to: learnatfultonbank.com.

Types of Business Loans

Business loans are available in a range of shapes and sizes to fit a variety of company needs.

  • Term Loans: The traditional loans that are paid at regular intervals based on a specified repayment period.
  • SBA Loans: Loans for small businesses with terms that reflect government backing.
  • Lines of Credit: A commitment of funds available for drawdown, as required.
  • Equipment Financing: Loans for the sole purpose of buying equipment for the business.
  • Invoice Factoring: Cash derived from customers which aren't paying.

Specialized Loans

  • Startup Funding Loans – for businesses with a limited operating history.
  • Business Expansion Loans: created for established businesses seeking to expand.
  • Commercial Business Loans: Larger loans for real estate or substantial equipment purchases.
  • Short-term Business Finance Cashflow Based: Fast cash with quicker repayment options.
  • Secured vs. Unsecured Loans: Loans backed by an asset beyond the promise of repayment.

Interest Rates and Terms

The interest and terms for business loans can be fixed or variable depending on the type and length of the loan.

Factors that affect interest rates:

  • Personal and business credit scores
  • Time in business
  • Annual revenue
  • Industry risk
  • Loan type and amount
  • General economic conditions

Short-term loans often have higher rates but are easier to qualify for, and long-term loans have lower rates but require more to qualify.

How to Get the Lowest Rates

  • Boost your credit score
  • Have a strong business plan
  • Shop around with multiple lenders

Choosing the Right Provider for Your Business Loan

Choosing the right lender determines not only the terms of your loan but also whether your loan application is a pleasurable and smooth process.

Factors for Comparing Lenders

  • Rates and Loan Costs: Look at the all-in cost of borrowing.
  • Loan Terms And Repayment Schedules: Search for options that suit your cash flow.
  • Requirements: The requirements to apply are, obviously, simpler with some lenders than others.
  • Speed of funding: Figure out how fast you need the money.
  • Customer Support: Check the company’s customer service and support reputation.

Conventional banks usually offer the lowest rates, but the most stringent requirements, and online lenders tend to provide quicker funding and are not as strict with eligibility qualifications.

Special Considerations for Different Types of Businesses

All businesses have different financing needs, requirements, and challenges and it really depends on the type of business when getting a loan.

Small Business & Startups

Businesses that are newly established should think about:

  • SBA Microloans
  • Business Credit Cards
  • Angel Investors or Venture Capital
  • Crowdfunding Portals
  • Community Development Financial Institutions (CDFIs)

Women-owned Businesses

You’ll find a variety of loan programs for women-owned businesses:

  • SBA Women-Owned Small Business Federal Contracting Program
  • Women’s Business Centers
  • Private Grants and Loan Programs for Female Enterprise Owners

Learn more at SBA Women’s Business Centers.

Loan Management and Refinancing

Proper loan management and refinancing can give financial stability and/or flexibility.

Refinancing Benefits

Refinancing a business loan can:

  • Reduce loan interest rates
  • Lengthen the term of the loan
  • Consolidate debt payments and Save cash

Loan Management Tactics

  • Establish history for automatic payments and prevent additional penalties.
  • Keep an eye on your debt-to-income ratio.
  • Keep in touch with your lender.
  • Do what you’re able to in order to make additional payments.

Conclusion

Applying for a company loan is about meeting business priorities, having good documentation and asking tough questions when choosing a lender. If you follow the process detailed in this guide and spend some time to find the best type of loan for your needs, you can improve your odds of getting quality financing for your business. Keep in mind that lending criteria can differ greatly between lenders, so it’s certainly worth comparing multiple options before taking the plunge. You should work with a financial advisor or small business development centers for guidance specific to your company’s needs.

FAQ

What determines if I qualify for a business loan?

What’s the process of getting a business loan?

What kinds of business loans are available?

What influences interest rates and loan terms?

Are there particular considerations for certain types of businesses?

How can I handle and refinance my commercial loan well?

Click here to apply for financing with WeFrontIt.

```

Read more