What You Need Before You Start

Before you contact a lender, gather the documents that nearly every small business loan process will ask for. You will need your business plan (a written description of what your business does, who your customers are, and how you make money), your personal tax returns from the last two years, your business tax returns or profit-and-loss statements for the last two years, and a personal credit report. You can get your credit report free once a year from AnnualCreditReport.com.

You will also need to know how much money you need and what you will use it for — whether that is equipment, inventory, payroll, or real estate. Lenders want to see that you have thought through why you need the money and how it will help your business grow or stay running. If you are explore for an SBA loan specifically, you will need to show that you have been turned down by a conventional bank, or that the SBA loan terms are better for your situation.

Have your business license, articles of incorporation or partnership agreement, and a list of any existing debts ready. If you own real estate or equipment, bring documentation of what you own. The more organized your paperwork is before you walk in, the faster the process moves.

Key Takeaways

  • Gather your business plan, two years of personal and business tax returns, and a personal credit report before you contact any lender.
  • You can explore directly to banks and credit unions, or through the Small Business Administration if you have been turned down elsewhere or want SBA-backed terms.
  • The lender will review your credit, your business plan, and your ability to repay, then either approve, deny, or ask for more information.
  • SBA loans typically take four to six weeks from process to funding, while conventional bank loans may be faster or slower depending on the bank.
  • If you are turned down, ask the lender why and whether you can reapply after addressing those concerns.

explore Directly to a Bank or Credit Union

The fastest route for many small business owners is to explore directly to a bank or credit union where you already have a business account. Call the small business lending department and ask what documents they need. Most banks have a standard process form that takes 15 to 30 minutes to fill out, plus a checklist of what to bring or upload.

You can also explore online through the bank's website if they offer it. Upload your documents, fill in the loan amount and purpose, and submit. The bank will then order a credit report and review your business financials. This process usually takes one to three weeks. The bank will call you if they need more information or if they are ready to make an offer.

Banks are more likely to say yes if you have good personal credit (usually 680 or higher), at least two years in business, and steady revenue. If you are brand new or have weak credit, a bank may turn you down — that is when the SBA route becomes useful.

explore Through the Small Business Administration

The SBA does not lend money directly. Instead, it guarantees loans made by banks and other lenders, which means the lender takes less risk and may offer better terms. To get an SBA loan, you explore through a bank or credit union that participates in the SBA program, not through the SBA itself.

Ask your bank whether they offer SBA loans. If they do not, the SBA website has a tool called the Lender Match that shows you participating lenders near you. You can also contact your local Small Business Development Center (SBDC) — they are free and can help you prepare your process and find a lender.

SBA loans come in three main types: the 7(a) loan program (for general business purposes, up to $5 million), the Microloan program (for smaller amounts, usually under $50,000), and the CDC/504 loan program (for real estate and equipment). Each has different terms and requirements. Your SBDC or lender can tell you which one fits your situation.

What Happens After You Submit Your process

Once you submit, the lender will order your credit report and verify the information you provided. They will also ask you to sign a form allowing them to check your credit and business records. This is normal and expected.

The lender's underwriting team will then review your business plan, your tax returns, and your credit history to decide whether you can repay the loan. They may ask follow-up questions about unusual items on your tax return, gaps in your business history, or why you need the money. Answer these questions as soon as you can — delays in responding can slow down the whole process.

For a conventional bank loan, this review usually takes one to three weeks. For an SBA loan, it typically takes four to six weeks because the SBA has to review the file as well. Some lenders are faster; some are slower. Ask your lender for an estimated timeline when you submit.

Understanding Approval, Denial, and Conditional Offers

If the lender approves your loan, they will send you a loan agreement to sign. Read it carefully and ask questions about anything you do not understand — the interest rate, the monthly payment, when payments start, and what happens if you miss a payment. Once you sign, the lender will fund the money into your business account, usually within a few business days.

If the lender denies your loan, they must tell you why. Common reasons are low credit score, not enough time in business, inconsistent revenue, or too much existing debt. Ask the lender specifically what you would need to change to reapply. Some lenders will let you reapply after six months if you have improved your credit or grown your revenue.

Some lenders offer a conditional approval, which means they will lend to you if you meet certain conditions — such as paying down existing debt, adding a co-signer, or putting up collateral. If you get a conditional offer, decide whether you can meet those conditions before you agree.

What Collateral and Co-Signers Mean

Many lenders will ask for collateral, which is something of value that the lender can take if you do not repay the loan. Common collateral includes business equipment, inventory, real estate, or a personal may provide (your personal assets). If you have weak credit or a short business history, the lender is more likely to ask for collateral.

A co-signer is a person who agrees to repay the loan if you cannot. Co-signers are usually business partners, family members, or investors. The co-signer's credit and income are reviewed just like yours, and they are legally responsible for the full loan amount if you default. Do not ask someone to co-sign unless they understand this responsibility.

If the lender asks for collateral or a co-signer, ask whether you can get the loan without them. Some lenders will approve you without either if your business is strong enough. If they will not, decide whether the loan is worth the risk of losing the collateral or putting someone else's finances at risk.

If You Are Turned Down or Want to Explore Other Options

If you are turned down by multiple lenders, you have other options. Microlenders are nonprofit organizations that lend to small businesses that banks have turned down. They typically lend smaller amounts ($50,000 or less) and focus on helping new or underserved businesses. The SBA's Microloan program is one example, but there are also community-based microlenders in most areas.

You can also explore lines of credit, which let you borrow money as you need it rather than in one lump sum. Lines of credit often have lower interest rates than loans and may be easier to get if you have a business bank account with a long history.

Some business owners use personal loans or credit cards to fund their business, though this is riskier because you are personally liable for the full amount. Talk to your accountant or SBDC advisor before going this route — they can help you understand the tax and legal implications.

Frequently Asked Questions

How much can I borrow?

It depends on the lender and the loan program. Conventional bank loans range from $25,000 to several million dollars. SBA 7(a) loans go up to $5 million. SBA Microloans are usually under $50,000. The lender will tell you the maximum based on your business revenue and creditworthiness.

What interest rate will I pay?

Interest rates vary by lender, your credit score, the loan amount, and how long you borrow for. SBA loans typically have lower rates than conventional loans because the SBA guarantees them. Ask the lender for the rate before you sign anything, and compare rates from multiple lenders.

Can I get a loan if I have bad credit?

Yes, but it will be harder and more expensive. You may need a co-signer, collateral, or a larger down payment. Microlenders and some SBA lenders work with people who have lower credit scores. Start by talking to a local SBDC — they can help you find lenders who work with your situation.

How long does the whole process take?

A conventional bank loan usually takes one to three weeks from process to funding. An SBA loan typically takes four to six weeks. Some lenders are faster; some are slower. Ask your lender for a timeline when you submit your process.

What if I need the money quickly?

Bank lines of credit and some online lenders can fund in days rather than weeks, though they often charge higher interest rates. If you need money fast, ask your bank about a line of credit first. If that does not work, talk to an SBDC advisor about other options.