How to Get a Small-Business Loan - 5 Steps

Posted by wahab on March 27th, 2020

If you are here, then you are probably a small business owner with the plan of getting a small business loan. Well, the idea of getting a loan can be quite daunting as we all know that it is quite hard for small scale businesses to secure business loans, especially with a poor financial history.

So if you are planning on getting a small business loan, then you must have least to no idea about how to get a small business loan. Honestly, it is not an easy task, and it varies from lender to lender and from business to business. Things might be easy for your friend but not for you.

So, in short, no one is sure of whether you will be able to get a business loan or not. In the end, it all depends on the lender and your financial history. So before we jump to conclusions, let us look at steps that you need to follow in order to get a small business loan.

1. Why do you need it?

The very first thing that a lender will ask you is why you need this loan? It seems like a simple question, but your answer will have a major effect on the decision that he makes, which is why it is important that you know what you are going to say to the loan officer.

In most cases, you will either need it to start your business, buy inventory, expand your business, or manage your day to day business expenses. But you can’t give a two-word answer! You need to explain to him exactly why you need it and how much you need it.

2.       Type of loan

If you are planning on getting a business loan, then you should know that there are multiple different types of loans that the financial institutions out there have to offer. If you are just starting your business, then you wouldn’t have any financial history or an asset to pledge as collateral. In such cases, you will have to try out unsecured business loans. So, do your research to know what kind of loan you need.

3.       Type of Lender

When we talk about loans, banks are the first lenders that come to mind. Some business owners don’t even know that there are other lenders out there as well, which can finance their businesses. So before you make any decision, make sure to check out all the lenders such as banks, micro-lenders, online lenders, and other non-profit financial institutions.

4.       Qualifying Requirements

Before you go to the lender, make sure to check out all the information that they have provided on the internet. Most lenders have mentioned everything on their websites, including the qualifying terms and conditions. So ensure that you meet the eligibility criteria before going there in person.

5.       Gather your documents

If you are eligible, then that means there are 50% chances that you might get the loan. So check out all the list of required documents. If you are not sure what to get, then make sure to carry all your financial record, business registration-related documents, and additional documents that you think might help your secure the loan.

Final Words

These are the basic steps that you need to go through in order to secure a small business loan. Seems easy? Well, it is if you have everything that you need to get the loan. In case you don’t, that is when things get hard, but there is no point in losing hope as there are multiple ways in which you can still secure a loan to finance your small scale business.