Short answer: decide how much you need and what it is for, check your credit, choose the type of loan that fits, gather your documents, and apply to lenders that match your profile. Most rejections come from applying for the wrong product or to the wrong lender, not from the business itself.
It helps to know the odds going in. In the Federal Reserve's latest Small Business Credit Survey, about one in five applicants were denied outright, and only 41% received the full amount they asked for (our denial statistics study has the details). The steps below are about putting yourself in the other group.
Step 1: Know how much you need and why
Lenders ask two questions first: how much, and what for. Have clear answers:
- The amount. Base it on a real number: a quote for equipment, an inventory order, or a cash flow gap you have measured. Asking for too much is a common reason for a smaller offer or a denial.
- The use. Equipment, inventory, hiring, a new location, refinancing expensive debt, or working capital. The use points to the right product.
- The payment you can afford. Use our business loan calculator to turn an amount, rate and term into a monthly payment, then compare it with your slowest month of revenue.
Step 2: Check your personal and business credit
Most small business loans look at the owner's personal credit, and many also check business credit.
- Get your free personal credit reports from all three bureaus at AnnualCreditReport.com and dispute anything wrong.
- Check whether your business has credit files with the business bureaus (Dun & Bradstreet, Experian Business, Equifax Business).
- If your score is low, read bad credit business loans before you apply. It changes which lenders you should approach.
Step 3: Pick the right type of loan
Matching the product to the need is the biggest single factor in getting approved:
| If you need money for | Look at |
|---|---|
| A large, long-term investment and you can wait 30 to 90 days | SBA 7(a) loan |
| A one-time purchase or project | Term loan |
| Ongoing cash flow gaps | Business line of credit |
| Machinery, vehicles or tech | Equipment financing |
| Cash tied up in unpaid customer invoices | Invoice factoring |
| Money within days | Fast business loans |
Not sure? Compare all 7 business loan options or let our loan matcher suggest a fit.
Step 4: Gather your documents
What you need depends on the loan. Fast online products may ask only for the first group. Bank and SBA loans usually ask for all of it.
For almost every loan
- Government-issued photo ID for each owner with 20% or more of the business
- Your EIN (or SSN if you are a sole proprietor with no employees)
- Business bank statements for the last 3 to 12 months
- Formation documents: articles of incorporation or organization, operating or partnership agreement, or DBA filing
- Business licenses and permits for your industry and location
For larger loans, banks and SBA loans
- Business tax returns for the last 2 to 3 years
- Personal tax returns for each major owner
- Year-to-date profit and loss statement and balance sheet
- A debt schedule listing every current business debt: lender, balance, payment and rate
- Your commercial lease, if you rent space
- For SBA loans, the SBA's own forms, such as the Borrower Information Form (Form 1919) and a Personal Financial Statement (Form 413) for each owner
Depending on the loan
- Equipment quotes or invoices (equipment financing)
- Accounts receivable aging report (invoice factoring, lines of credit)
- Card processing statements (merchant cash advances)
- Business plan and projections (startups, SBA and larger bank loans)
Download bank statements as PDFs straight from your bank. Screenshots and edited files slow things down or get rejected.
Step 5: Write a short business plan
Not every loan needs one. Fast online loans and cash advances rarely ask. Banks, SBA lenders and anyone lending to a newer business usually do. A good plan for a loan is short and focused on repayment:
- What the business does and who its customers are
- How much you need, exactly what it pays for, and how it helps you earn more
- Your current revenue and costs, and projections for the next one to three years
- How the loan will be repaid, including what happens if sales dip
- Your experience and the experience of your team
Our guide to a business plan for a business loan has a one-page template. If you are applying for an SBA loan, check the SBA loan requirements too.
Step 6: Compare lenders
Different lenders want different borrowers. Banks offer the lowest rates but have the strictest rules. Online lenders approve more often and faster but cost more. Our guide to small business loan lenders explains each type and who they suit.
When you compare offers, line up:
- APR, not just the interest rate or factor rate
- Total repayment over the full term
- Payment frequency: monthly, weekly or daily
- Fees: origination, draw, prepayment and late fees
- Personal guarantee and collateral: what you are putting on the line
Step 7: Apply, and what happens next
- Application. Complete it fully and honestly. Gaps and guesses cause delays.
- Review. The lender verifies your documents, checks credit and may ask follow-up questions. Answer them quickly.
- Offer. You receive the amount, rate, term and fees. You do not have to accept the first one.
- Closing. Read the agreement before you sign, especially the payment schedule, any prepayment penalty, the personal guarantee and any lien on your business assets.
- Funding. Money arrives in your account. Timing ranges from a day for some cash advances to several weeks for SBA loans.
What if a bank or the SBA says no?
A denial is not the end. Ask the lender for the specific reason, because it tells you what to fix or where to go next:
- Credit score: look at alternative lenders that weigh revenue more heavily.
- Time in business: some online lenders work with businesses under two years old.
- Collateral: equipment financing and invoice factoring are secured by what you are buying or by your invoices.
- Cash flow: a smaller amount or a longer term may fit.
Read 7 reasons your SBA loan was denied and applying for a second SBA loan or after a denial for what to do next.
Frequently Asked Questions
How do I get a business loan?
Work out how much you need and why, check your credit, choose the loan type that fits that need, gather your documents, compare lenders and apply. Applying to lenders that match your credit, revenue and time in business is what makes the biggest difference to approval.
What documents do I need for a business loan?
At a minimum, expect photo ID for each major owner, your EIN, formation documents and recent business bank statements. Banks and SBA lenders usually also want business and personal tax returns, a profit and loss statement, a balance sheet and a list of your current debts.
Do I need a business plan to get a business loan?
Not always. Fast online loans and merchant cash advances rarely ask for one. Banks, SBA lenders and lenders to newer businesses usually do. Keep it short and focused on how the money will be used and repaid.
How long does it take to get a business loan?
Some merchant cash advances and invoice factoring fund in one to three business days. Online term loans and lines of credit usually take a few days to two weeks. Bank and SBA loans usually take 30 to 90 days. Having your documents ready is the easiest way to shorten any of these.
Can I get a business loan if the bank said no?
Yes. Banks have the strictest requirements of any lender type. Alternative lenders often approve businesses that banks turn down, though usually at a higher cost. Ask the bank why you were declined, fix what you can, and apply to lenders that fit your profile.
Does applying for a business loan hurt my credit?
A hard credit check can lower your score slightly for a short time. Many lenders start with a soft check that has no effect. Applying through one matching service instead of many lenders at once also limits the number of checks.
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Ready to see what you qualify for? Our instant quote gives you a funding range in about 60 seconds with no credit pull, and our loan matcher connects you with lenders that fit your business. We are a matching service, not a lender, and you never pay us.