How to Apply for a Small Business Loan

For a small business, a loan can be the difference between utter failure and making a dream come true. There is a lot of money available for loan to small businesses, but it can seem very hard to get. Here's how to apply for a small business loan:

  1. Find a loan There are tons of loans out there from government agencies, banks, credit unions and other private lenders. There are also different types of loans and loan programs. Figure out what loans best fit your small business. Remember, small businesses are often successful when applying for loans from local financial institutions [source: Cordeiro].
  2. Provide a business profile Explain everything about your business in a concise, written description. Discuss your business, the product or service you supply, who your customers are and what suppliers you have. Also include your annual sales, number of employees and a little about your competition [source: SBA].
  3. Provide background information about management Attach resumes for every owner and key member of your business' management [source: SBA].
  4. Request the money Tell the lender how much money you need and what you plan to use it for. Convince them with facts that you deserve the money [source: SBA].
  5. Explain your business and repayment plans Every lender's bottom line is how you're going to pay them back with interest. Be sure to have a rock-solid repayment plan [source: Cordeiro].
  6. Put up collateral Lenders need a secondary source that comes from property or other real assets your company or its owners have [source: SBA].
  7. Provide business and personal financial statements Give your lender financial details about all the business' owners, partners and large stockholders as well as about the business itself. Provide three years of financial statements including balance sheets, income statements and a reconciliation of net worth. If your business is just starting, give projections with reliable, documented support [source: SBA].
  8. Check for other forms and information Every lender requires you to fill out specific forms when you apply for a loan [source: SBA].
  9. Stay in touch with your lender Follow up on your loan application to make sure you've supplied enough information and to stay on top of its status.