Estimated Reading Time

7 minutes

Key Takeaways

• Knowing where you can go to apply for a small business loan is an important part of the process.
• There’s something for every type of business in terms of bank loans, online lending providers, SBA loans, and community-based lenders.
• Having your documents prepared and ready can hasten and smoothen the process of application.
• More hands-on support from groups like SCORE also will be beneficial.

Table of Contents

• Traditional Banks and Credit Unions
• Online Lenders
• Small Business Administration (SBA) Loans
• Community-Based and Mission-Oriented Lenders
• Application Process at a Glance
• Other Resources
• Recap Table: Where to Apply

Body Content

In the exciting world of entrepreneurship, obtaining a small business loan can be the turning point in transforming your dreams into reality. No matter if you are looking to grow your business, buy new equipment, or provide working capital for your business, you need to know where to apply for a small business loan. We are taking a deeper dive on the routes that entrepreneurs can take to apply for and receive financing, by demystifying the steps and providing an in-depth view of the strategic considerations you need to make your way.

Traditional Banks and Credit Unions

One of the first and most established options for obtaining a small business loan is to go through traditional banks and credit unions. These banks and credit unions have been cornerstones of the business community for decades. Many small businesses choose to apply for loans at banks or credit unions, which can require in-person or phone applications depending on the product and lender. For example, some products such as business auto loans might offer online applications, while you may need to book appointments at a branch or over the phone for others (NerdWallet, SoFi). For tips on how to get a bank business loan with confidence, refer to this post. These types of institutions usually have strict credit history and business financials. But they do frequently feature competitive rates and terms for qualified borrowers, and are an enticing opportunity for businesses in sufficient financial shape to earn approval.

Online Lenders

For tech-savvy borrowers who insist on a more digitalized process, online lenders become an attractive option. These are modern-day lenders providing a fresh take on old-school lending and using technology to make the process fast and efficient. Internet-based lenders, such as Fundbox, enable small-business owners to connect their business account and apply online through their websites. That process is streamlined when compared with traditional banks (NerdWallet, SoFi). For a glimpse at rapid online business loan options, click here. The paperwork needed and speed of approval can be quicker with online lenders. Some are even offering decisions and funding within days, so they’re a good choice for businesses that need quick access to capital or may not be immediately eligible for a traditional bank loan (SoFi). Larry Lokes, CPA

Small Business Administration (SBA) Loans

For those who want more advantageous loan terms and assistance, there may be hope in SBA loan programs. Though the SBA is not the usual direct lender to most businesses, it establishes guidelines and provides guarantees for loans issued by its partner lenders, mitigating risk and improving access. 7(a) Loans: The SBA’s flagship general business loan program, which covers most common business financing needs. Loans are made by SBA-approved lenders (SBA). Here is a closer look at SBA loans and their advantages and types. CDC/504 Loan: Long-term, fixed-rate loans through a Certified Development Company are available to help finance expanded businesses or major fixed assets (SBA). Microloans: Providing up to $50,000, microloans are suited to needs of a small amount of capital (SBA). Business owners can use the SBA’s Lender Match tool to find participating lenders (SBA). What’s more, SBA disaster loans exist outside of intermediaries for recovery from certain declared disasters, and have proven to be instrumental during economically challenging times (SBA).

Community-Based and Mission-Oriented Lenders

For businesses that are based in underserved communities or mission-driven, community-based and mission-focused lenders can serve as a lifeline. These are the lenders that seek options for growth in the places where traditional lenders might fear to tread. Community Development Financial Institutions (CDFIs), local credit unions, and nonprofit lenders also work with underserved people and may have less stringent rules. Microloans from mission-based lenders serve both the smallest of the small businesses, minority- and/or women-owned businesses, and startups while helping to bring to bear the diverse dreams of entrepreneurs (SBA). To consider more alternatives for community-led financing, read about small business lenders here.

Application Process at a Glance

Decide what type of loan and lender you want based on: your financials, sense of credit worthiness and urgency (NerdWallet, SoFi). For more detailed information on how to obtain a business loan, you can click here. Prepare necessary documentation:

• Business and personal bank statements
• Tax returns (business and personal)
• Legal business documents
• Identification and resume
• Business plan and revenue/profit statements
• Accounts receivable and payable (SoFi)

Submit your application online, over the phone, or in person, if that’s what they require. Dealing with any follow-up questions or requests for more documentation from your lender. Review and sign the loan agreement if approved, and you should get your funds, by and large within a few days to a week, depending on the lender and loan type (NerdWallet, SoFi).

Other Resources

Entrepreneurs don’t have to go through the loan process on their own. Hands-on guidance also provided for extra confidence as well as fine-tuning. Local small business development centers and organizations such as SCORE provide no- or low-cost advice and can help you look over your application before you submit it (NerdWallet). SCORE and other non-profit organizations can help you in connecting with business attorneys to review the loan agreements for legality, so that you know exactly what you’re getting into and can change any terms you don’t understand or approve of (NerdWallet).

Recap Table: Where to Apply

Here's a helpful list of where to apply and what to expect:

Finding the right small business loan is a strategic decision that requires some thought and consideration. From the more traditional banks to the revolutionary online lenders, community-focused institutions and supportive organizations, there is something to suit different requirements. Begin your quest by selecting the best lender or program for you, collecting documentation that they need, and following the easy, simplified paths they provide (SBA, NerdWallet, SoFi). And, of course, with the right financial support, ideas can make that leap from figment of imagination to business success, as dreams and aspirations are brought to life and become real. Good luck in finding your loan, and we hope your road to entrepreneurship is one full of limitless opportunities to grow and innovate!