You can shop for small business loans by visiting nearby banks, contacting your local SBA office, reaching out to your city’s chamber of commerce or searching online. Once you choose a lender, the application process would likely start with some paperwork requesting basic information about your company, how much money you need and how you plan to spend it.
Next, a lender may review these basic requirements:
- Credit score: Lenders check credit history to determine your risk as a borrower. The lower your score, the higher your interest rate may be, if you are approved. Lenders may prefer borrowers who have a personal credit score around 700, although some online lenders may accept a score as low as 550.
- Time in business: Most lenders want to see that you’ve been in business for some time. Two years in business is often a standard minimum for term loans.
- Business revenue: Lenders will evaluate your annual gross revenue, including all of your sales and other sources of income. Your revenue and cash flow will give lenders an idea of whether or not your business could repay a loan.
See if you qualify for a term loan
The timeline for approval and time to funding would depend on the individual lender. As mentioned earlier, online lenders are often fastest to fund loans, while traditional banks may take a bit longer.
Your term loan application may require a few additional documents. It may be helpful to have some essential information on hand before sitting down to apply:
- Business plan
- Business and personal bank account statements
- Business tax returns and personal tax returns
- Proof of business registration and licenses
- Employer identification number
- Profit and loss, cash flow and balance sheet
- Proof of collateral (if required)
- Business assets and liabilities