How to Find a Small Business Loan

Whether starting out on a new business venture, or trying to keep a business afloat, the issue of how to obtain a small business loan is a very real for many people. It takes serious work to not just find a small business loan, but to obtain one. The chances of success are highly dependent upon the applicant’s level of preparation. Obtaining a small business loan may prove more difficult if you are just starting out, but this potential obstacle can be overcome by making a little extra effort.

Prepare a Good Business Plan or Loan Proposal

Before approaching any organization, or person, about a loan, the applicant needs to put together documents outlining information that the lenders will need. This information includes how much money is required, what it will be used for, and when it will be repaid. Additional things to be outlined are:

  • Cash flow projections – these will help to cement the business’s potential for success.
  • Credit rating
  • Previous tax returns
  • Your business expertise, and any experience in that particular field of business
  • A financial statement outlining your assets
  • How much money you have put, and are willing to put into your business
  • What collateral is available (if required)

At the end of the day, the loan providers simply want the assurance that you are a good credit risk.

There are many sources of small business loans, and it may take approaching more than one source, or type of source, before the loan is approved. Even if one attempt is unsuccessful, keep going. Confidence is a key asset, and it needs to be graciously demonstrated that one refusal will not prevent you from seeing your business succeed. Find out from that source what the weak points were, and improve on them for the next loan source that is to be approached.

Bank Loans

It is recommended that small business owners foster a healthy relationship with their local banks. Each bank has different requirements, but you may stand a better chance by starting with your personal bank. Many banks offer low-interest loans with long repayment periods. These loans can be hard to obtain, so preparation is key.
Credit Union Loans
Credit unions generally offer loans with low interest rates, and better terms than most other loan sources.

SBA Loan Programs

The Small Business Administration (SBA) will not provide you with the loan, but will help you to get a loan from one of its many affiliate banks and agencies. An SBA loan representative can aid you in preparing for the SBA loan application process. The SBA website,, has additional information and small business management tips.

Other options

There are many other options available, such as friends and family, small business investment agencies, private loan agencies, investment schemes and credit cards. Every option needs to carefully analyzed, and it is best to choose those with the lowest level of associated risk.

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