{"id":5127,"date":"2016-04-04T10:47:57","date_gmt":"2016-04-04T15:47:57","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/starting-a-business\/applying-for-a-loan-do-s-and-don-ts.html"},"modified":"2026-05-08T23:44:00","modified_gmt":"2026-05-09T04:44:00","slug":"applying-for-a-loan-do-s-and-don-ts","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/applying-for-a-loan-do-s-and-don-ts.html","title":{"rendered":"How to Successfully Apply for a Small Business Loan"},"content":{"rendered":"\n
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How to Successfully Apply for a Small Business Loan<\/h1>\n\n
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\n By Amber Sheppard, Esq.<\/a> | Legally reviewed by Laura Temme, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Small business financing comes through traditional bank loans, SBA-guaranteed loan programs, or business lines of credit or merchant cash advances used to fund a company\u2019s startup or expansion. Owners must have a business plan, financial records, and a good credit score.<\/p>\n\n <\/div>\n\n\n\n

Small <\/span>business<\/span> financing<\/span> is vital to a new business<\/span>\u2019s success. Small <\/span>business<\/span> loans<\/span> are a great way to help finance small business<\/span> owners<\/span>\u2019 initial\u00a0startup<\/span> costs<\/a>. Your startup<\/span> costs and loan amount<\/span> depend on your business needs<\/span>. Startup<\/span> costs range from equipment for a gym to purchasing real estate<\/span> to build an apartment complex.<\/p>\n

For instance, suppose you have an excellent idea for a cycling gym but need the\u00a0initial capital<\/a>\u00a0to buy the spin bikes. You can apply for a business loan<\/span> to cover those essential equipment costs needed to open your business.<\/p>\n

If this is your first\u00a0business loan<\/span> application<\/a>, this article and proper financial planning can help you prepare for success. This article can\u2019t guarantee that you will get approved, but it can help you prepare for your initial meeting with a lender<\/span>. As a borrower<\/span>, you will feel more confident and show you\u2019ve done your homework.<\/p>\n

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Financing Options<\/span><\/h2>\n

What type of financing borrowers<\/span> choose depends on the eligibility<\/span> requirements<\/span> of each loan program<\/span> or online lender<\/span>. Some financing options<\/span> and loan offers require a minimum credit score<\/span>.<\/p>\n

SBA Loans<\/span><\/h3>\n

The\u00a0U.S. <\/span>Small Business<\/span> Administration<\/span> (SBA)<\/a>\u00a0offers\u00a0Small Business<\/span> Administration<\/span> loans\u00a0to small business<\/span> borrowers<\/span>. To meet the criteria for an SBA loan<\/span>,\u00a0check this guide,<\/a>\u00a0as SBA defines small businesses<\/span> differently than you might think.<\/p>\n

Under the\u00a0SBA 7(a) loan program<\/span><\/a>, SBA <\/span>lenders<\/span> offer loans to small businesses<\/span> that cannot secure traditional loans with financial institutions.\u00a0SBA 504 loans<\/a>\u00a0are longer-term loans<\/span> to help finance equipment, land, and buildings. The\u00a0SBA microloans<\/span>\u00a0<\/a>only finance up to $50,000.<\/p>\n

Types of Business Loans<\/span><\/h3>\n

Traditional banks are the most common option for small <\/span>business<\/span> loans<\/span> when someone has excellent credit or even good credit.<\/p>\n

Your loan amount<\/span> depends on the amount of cash flow<\/span> you need. Interest rates<\/span> fluctuate and rely on a variety of factors, like the economy and your credit score<\/span>. Interest rates<\/span> typically increase the lower your credit score<\/span> is and are based on what the economy is doing. You can lower your rate if you raise your down payment<\/span>.<\/p>\n

Below is a list of common types of funding options:<\/p>\n