Small business owners often have big dreams for their businesses. Many owners need help to achieve those goals, however. A small business loan can provide you with essential financing to help your business succeed.
Getting the financing you need can be a long process. To apply for financing, you need to do more than fill out an application. Lenders require documentation about your business, your financials, and other information. The types of documents that you need will depend on the type of lender you choose. Here’s what you’ll need to apply for a loan.
SBA Loans
The Small Business Administration (SBA) guarantees up to 75% to 90% of your loan to your lender. As such, it has a very thorough application process. While it can take a while to get funding, rates and terms are favorable. You can also qualify for an SBA loan more easily than a conventional loan.
To qualify for an SBA loan, you need to provide a significant amount of documentation to prove that you are capable of paying back your loan. You will need:
- 2 to 3 years of tax returns (business and personal)
- Financial statements for the past year
- Your credit information
- The lease for your business
- Information about your business
Conventional Bank Loans
A small business loan from a bank can be a bit more challenging to get. Just like with any other loan, you need to prove that you are capable of paying back what you borrow. Bank requirements are much more stringent, however.
The financial health of your business is a major factor in determining your eligibility for a bank loan. You will need to provide:
- Financial statements
- Your credit information
- The lease for where you do business
Alternative Lending Loans
Alternative lenders typically have the most relaxed requirements to determine eligibility for a small business loan. Turnaround times for funding are much faster than SBA and conventional loans, but rates and terms are often not as ideal. Approval rates are typically much higher.
You do need to provide some documentation to qualify:
- 3 to 6 months of bank statements
- Your bank account information
- Basic information about your business (such as your industry)
Some alternative lenders require a credit check. Others do not. While rates are generally higher than other types of lenders, they can provide quick access to funding to businesses that might not qualify elsewhere.
Applying for a loan can be a long process. Having all of your documents in order before you fill out the application can help to ensure that there are no delays in getting the funding you need.
