How to get a business loan from a bank

    If you’ve been running your small business for a year and have financials that show your company’s profitability, you’re ripe for approval for a small business loan from traditional lenders like banks or credit unions.

    Startups can also get bank loans, even as personal loans. A personal loan can be an unsecured loan since you are not putting any business assets as collateral.

    If you opt for a personal loan, get business credit cards from the same bank. Make your monthly payments. That will boost your personal credit score and improve your positioning to get a business loan in the future.

    Let’s take a look at getting a traditional bank loan for your business.

    Should you apply for a business loan from a traditional bank?

    There are many options for business loans, different from traditional lenders.

    Do you have to go to a bank?


    • Term loans typically have longer repayment times than loan repayments from online lenders
    • If you choose a Small Business Administration affiliated and approved bank, all of your financial information is already on file. That means you’re ready to access SBA programs, even disaster relief, such as the one being provided during the pandemic.
    • SBA loans typically have a lower interest rate.
    • With good business finances and a proven positive cash flow, the business loan approval process can be short and smooth.


    • The approval process for small business financing will most likely take longer than with online lenders.
    • If you have bad credit, either your business credit score or your personal credit history, you are unlikely to get a loan.
    • Your financial institution will charge loan application fees and other fees during the approval process.
    • Obtaining an SBA loan usually requires additional paperwork, such as business asset documentation.

    how to get a business loan from a bank

    Types of business loans offered by banks

    The type of loan you are looking for depends on your business needs.

    There are 3 main types of small business business bank loans offered by business lenders:

    1. Term loans – This type of loan establishes several elements: the amount borrowed, the monthly payment amount, the number of monthly payments and the annual percentage. With a term loan there are fixed monthly costs.
    2. SBA Guaranteed Loans – Within the SBA loan offerings are additional loan types and financing options: Working Capital – There is typically a 7 to 10 year repayment period for a working capital loan. Equipment Loan – This can help small business owners manage their business assets. The loan terms are usually 10 years. Real estate loan – Depending on your business credit report, the loan term can be up to 25 years.
    3. Business Line of Credit – This is similar to a business credit card, but with a better interest rate. A line of credit loan is basically an unsecured loan with a fixed revolving line of credit and limit, based on your business cash flow. You only pay interest on the money you withdraw. This is a good choice if you are waiting for the payment of debtors.

    How to get a bank loan for a company

    Only about 15% of most small business loans are approved. That can be a daunting statistic for a small business owner. But you can take steps to increase your chances of getting approval and the best business loan terms.

    1. Write or update your business plan.

    A concise, informative business plan stamps you as a professional entrepreneur. It is a necessary part of your bank loan process. The business plan describes your business operating costs, business credit profile, and long-term business goals. Many lenders require them as part of the business loan application.

    2. How will you use the loan?

    Please enclose a short letter with your application describing why you need the borrowed money.

    3. What type of loan do you need?

    Make sure you know what type of loan agreement is best for you and which small business lenders offer that type.

    4. Clean up credit scores

    If you have a bad rating with major business credit bureaus or with your personal credit scores, take steps to improve your score. Banks have a minimum number of credit scores they will accept before considering a loan application.

    5. Organize financial administration

    Make sure you have all the documents necessary to prove your business credit history, such as business bank statements, business credit card transactions, and personal tax returns.

    6. Network

    Check with other small business owners to see which lenders they recommend.

    7. Make an appointment with a lender.

    Tips on getting a bank loan for a business

    Here’s how to take your application to the top of the pile:

    • Dress the part – Dress as if you are also employed by the bank. Provide a professional appearance.
    • Practice your pitch – Have a friend or family member act as the loan officer.
    • Have someone proofread your business plan.
    • Make sure you have all the financial records you need and that they are organized.
    • Don’t just show up. Make an appointment. At that point, ask how the loan officer would like the financials presented. The loan officer may want to review the documents in advance, either mailed as hard copies or attached to emails.

    When is a good time to apply for a small business loan from a bank?

    Always make an appointment with a lending officer.

    Is it difficult to get small business loans from a bank?

    Only 15% of applications are approved. Many are rejected because they are incomplete. With the right documentation and professionalism, you can get a business loan.

    Which bank is most easily approved for a business loan?

    By the numbers, based on the number of business loan approvals, here are the top lenders: Bank of America, JP Morgan Chase, Wells Fargo, Citibank, PNC, and US Bank.

    How much will a bank lend you for a business?

    The amount you can get depends on your business credit score, business assets and cash flow, and more. Keep in mind that this number can change depending on the number of years you’ve been in business and the overall financial stability of your business.


    Image: Depositphotos

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