You’re 6 Steps Away From Qualifying for a Business Loan

ByNaftali FeigAug. 20, 2020

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Keep track of the steps you need for your business loan
Whether you’re just starting a brand-new business, ready to take your current business to the next level, or hoping to weather the current economic storm, the right loan can make all the difference. Before you apply, be sure to follow these 6 simple steps to make sure you’re putting your best foot forward.

The Top Lenders at a Glance

Minimum Credit Score Time Until Funding Visit Site
Lendio 580
As little as 24 hours View Rates
Fundera 680
2 days to 2 weeks depending on the lender View Rates
OnDeck 600
As fast as 24 hours View Rates

Calculating start-up costs? Updating the kitchen in your restaurant? Need a new laptop to keep your technology running smoothly? A business loan could be the answer. Thankfully, the Small Business Association (SBA) has set up guidelines so you can easily understand if your business qualifies for a loan. Keep reading and get the cash you need to grow your business.

Here are the 6 steps you should take to qualify for your business loan: 

Step 1: Have a Solid Business Plan

Whether you are applying for a loan from a traditional bank or an alternative lender, a thorough business plan is a must. Lenders will want to know how you plan to use the money, with details of the loan purpose and how you expect it will increase your revenues. You should include any financial projections and goals and show that your business has the cash flow to cover existing expenses plus loan payments. 

Your business plan should cover:

  • A description of your company, including competition, market share and an explanation of your product and service
  • An introduction to your management team and staff
  • An operations plan for inventory and facilities
  • Your marketing and sales plan

Step 2: Make Sure Your Personal Credit Is in Good Shape 

You (and any partners in the business) need to have a solid credit history in order to qualify for a small business loan.

Lenders want to see how you have handled debt in the past and make sure that you do not have a history of defaulting or making late payments. This goes a long way in assuring them that you are responsible with your financial commitments. Your FICO score, ranging between 300 and 850, shows lenders what your payment history looks like, how long you've been using credit, and how much you already owe. 

Step 3: Determine Any Business or Personal Assets That Can Be Used as Collateral

If you're taking out a large loan or have poor credit, you may be required to guarantee the loan with collateral. This can include any asset such as equipment used by the business, a vehicle, or real estate. It can also include ownership equity in the business. You'll need an appraisal of any assets you plan to use for submission with your application. It is generally easier to obtain a secured loan, and you will likely qualify for better interest rates if you are able to back up the loan with property.

Step 4: Decide How Much Money You Can Invest in the Business

All lenders require that the business owner put some of their own money into the business. This shows that you believe in the business enough to risk your own profits. No lender will provide you with 100% financing based on your business plan. For term loan, many lenders expect you to invest about 20% equity, similar to a down payment on a home before you take our a mortgage. The more personal equity you invest, the more favorably the lender will look upon your loan request.

Step 5: Update Your Resume and Gather Your Documents

Business lenders will want to see your work history. You may not be interviewing for a job, but you need to demonstrate that your education, experience, and accomplishments set the basis for your success as a business owner. The more professional you appear, the better your chances of securing a loan. You'll also want to include your tax returns (both personal and business), your balance sheet, any leases or mortgage documents, bank statements, your photo ID, and any commercial licenses and articles of incorporation. 

Step 6: Make a List of References.

Your list can include personal references, but should also have a few business references, as well. Past colleagues and supervisors, as well as vendors and clients who can vouch for you and/or your business.

Top Business Loan Lenders


Lendio is an online small business loan aggregator that brings business owners and lenders together on one platform. The site is free to use, and offers at over ten distinct loan programs, for every business need, from business acquisition to funding for commercial real estate, increasing your changes to find both a lender and a specific loan program that suits your needs.    

Pros Cons

10 different loan types

Some loans require collateral 

No minimum credit score    
Not a direct lender, so loan terms may change

Lendio Lendio Visit Lendio


Founded as an alternative to traditional bank loans, Fundera has worked hard to build a solid reputation of trust, professionalism, and competitive rates. With a wide range of loan types and flexible repayment options, Fundera gears itself towards small business loans and providesa range of loan options.

Pros Cons

Keeps information private, even from lenders

Can have additional fees 

Highly acclaimed Fewer lender options

Fundera Fundera Visit Fundera


OnDeck offers conventional business loans and lines of credit, allowing flexibility to get the loan you need. Best of all, you can have your money within 24 hours with fast approval and excellent customer service.

Pros Cons
24-hour approval High yearly revenue is required
Excellent customer service Only for businesses operating 1+ years

Visit OnDeck


Visit the top business loan lenders >>

There are millions of small businesses in the US. Whether yours succeeds or not is a matter of being prepared, committed, and a little bit lucky. Traditional small business lenders as well as alternative lenders are here to help you succeed, but you need to be able to meet the requirements. By following these guidelines you should have a great chance at securing a small business loan to establish or grow your business. Continue on your journey to securing a small business loan by reading these expert reviews. Or, check out this checklist to make sure you have everything you need before applying.