How to get a small business loan.

1. Decide on the right type of loan.

Before applying, determine the specific loan type that best suits your business needs. Whether it’s a traditional term loan, an SBA-backed loan, a line of credit, or equipment financing, choosing the right option ensures you get the appropriate funding for your goals.

2. Determine whether your business qualifies.

Lenders have specific eligibility requirements, such as credit score, business revenue, and time in operation. Review these factors and assess your financial standing to understand if you meet the qualifications. This step helps you focus on loans you are most likely to secure.

3. Compare lenders and choose the right one.

Different lenders offer varying interest rates, repayment terms, and loan conditions. Research banks, credit unions, online lenders, and SBA-approved lenders to compare their offerings. Selecting the best lender ensures you get favorable terms that align with your financial situation.

4. Gather required documents.

Lenders typically require documentation such as business financial statements, tax returns, a business plan, and legal paperwork. Organizing these documents in advance speeds up the application process and reduces potential delays.

When you’re doing all this paperwork, Adobe Acrobat can be a vital part of the process. Acrobat helps keep your documents organized and accessible nearly anywhere, on almost any device. And, if you’re going to be working in and out of the Microsoft Office Suite, the cross-compatibility with Adobe apps makes pulling together presentations and documentation more streamlined and easier.

The most commonly needed documents to have available are:

• Tax returns and tax documents
• Credit score information for you and your business
• Business and personal bank statements
• Business plans, including a growth plan

5. Apply and receive the funds.

Once everything is in order, submit your loan application with the selected lender. The approval process may take anywhere from a few days to several weeks, depending on the lender and loan type. If approved, you will receive the funds and can use them to support your business operations.

1. Government-backed loans.

Government-backed loans, such as those offered by the Small Business Administration (SBA), provide businesses with lower interest rates and more favorable repayment terms. Since these loans are partially guaranteed by the government, lenders face reduced risk, making it easier for small businesses to qualify. These loans are ideal for startups, expanding businesses, and those needing long-term financing for real estate, equipment, or operational costs.

As mentioned above, the most common are Paycheck Protection Program (PPP) loans and disaster loans. PPP loans were established in 2020 to offer low-interest loans to businesses that need to subsidize employee wages after economic hardship due to COVID-19.

SBA Disaster Loans are also designed to help businesses hit hard by the pandemic. Still, they can also help businesses that a disaster like a hurricane or forest fire has negatively impacted.

Many states and the federal government also offer low-interest loans and grants to many different business sectors. That list is a bit more extensive than the information provided here, so take the time to explore what aid and loans are available for businesses in your industry, and you might unearth some excellent opportunities.

2. Private loans.

Private loans come from banks, credit unions, and online lenders. They typically have stricter credit requirements and may feature higher interest rates compared to government-backed loans. However, they offer quicker approval processes and more customized financing options. These loans are well-suited for businesses needing immediate capital for expansion, purchasing inventory, or handling unexpected expenses.

When you start looking to the private sector for loans, the results can be hard to understand if you don’t know what you’re looking for. There are hundreds of lenders and thousands of different financing options. But if you have a rough idea of the total principal amount of the loan you need, and what interest rate you can handle, you’ll be in a better position to be able to sort through the options available to you.

3. Business lines of credit or microloans.

A business line of credit provides flexible access to funds that businesses can withdraw as needed, similar to a credit card. Instead of receiving a lump sum, businesses can borrow up to a set limit and only pay interest on the amount used. This option is useful for managing cash flow, covering short-term expenses, or handling seasonal fluctuations in revenue.

Another option for smaller amounts is SBA microloans which are small, government-backed loans designed to help startups and small businesses access affordable financing. Offered through nonprofit lenders, these loans provide up to $50,000, with flexible repayment terms and lower interest rates than traditional loans. SBA microloans are ideal for businesses needing funds for working capital, equipment purchases, inventory, or startup costs. They also often come with mentorship and business development support, making them a great option for new entrepreneurs looking to grow their businesses.

By understanding these different loan types, business owners can select the financing option that best aligns with their goals and financial situation.