Looking for a small business loan, but now quite sure where to start? You’re not alone. Most small business owners need help when learning how to get a small business loan.
This guide will show you how to find, compare, and apply for a business loan. Follow these steps to help you find and apply for the right loan quickly, so you can get back to growing your business.
1. Figure Out Why You Need a Loan
To get the right loan, you need to know how you want to use the funds. Deciding how you’ll use loan funds before you apply also makes it easier to apply for the right amount. You don’t want to get approved for a loan only to find out it’s not enough to cover your expenses.
For example, your business needs a new delivery van. You research van prices in your area and get quotes on the cost of the delivery vehicle you want. Now you have some idea of how much you’re going to need when applying for your loan.
2. Determine What Funding You Qualify for
You know what your loan funds will go to and how much funding you need. Now it’s time to figure out what type and amount of funding you might qualify for.
Many small business lenders will want to know about your:
- Credit Score: Does your credit history show you’re a responsible borrower?
- Time in Business: Is your business established or a startup?
- Available Cash Flow: Can you afford a monthly loan payment?
- Collateral Assets: Do you have assets that can be used to secure the loan?
You might find a lender who requires more or less than these common requirements. Zinch, for example, only requires you to be in business for more than six months and have at least $10,000 in sales each month. There’s no minimum credit requirement or collateral needed.
3. Compare Available Loan Options
There’s more to business financing than a traditional loan from a bank. Many lenders provide multiple business loan options. You’ll be able to choose the financing type that makes the most sense for your business.
Two common types of loans include term loans and merchant cash advances.
- Term Loans: A term loan is a straightforward business loan with a fixed payment, interest rate, and repayment period. Funds can be used for almost anything, and you’ll be able to budget your cash flow to cover the fixed monthly payment.
- Cash Advances: A cash advance is funding that’s repaid using a percentage of your credit and debit card sales. It’s ideal for businesses that need flexibility instead of a fixed payment. Payments are based on your current sales. If sales go down, so does your payment.
4. Research Small Business Lenders
Not all lenders are the same. It’s important to find a lender who has experience working with small businesses. This gives you the best chance of getting approved for a loan.
There are two main types of lenders:
- Loan broker: Loan brokers are middlemen that connect small businesses with lenders. This usually means stricter loan requirements (like minimum credit scores), longer loan processing, and higher rates due to broker fees.
However, working with a broker could make the loan application process easier, as they can help you sort through loan options and walk you through your application. - Direct lender: Direct lenders like banks, credit unions, and other financial institutions provide funding directly to your business. This cuts out a lot of unnecessary processing time, so you get a loan decision faster. Working with a direct lender also means you get more flexibility because your lender doesn’t have to follow strict loan requirements.
Not all direct lenders are the same, however. For example, banks usually require more paperwork and take longer to decide on your application compared to other direct lenders like Zinch.
5. Prepare Loan Documents and Apply
The application process is often the most straightforward part of getting a loan. Most lenders include instructions for completing their loan applications.
Direct lenders make it easy to complete your application with help from dedicated loan specialists. You’ll get your application in order faster, so your lender can review it and have a decision back in days — not weeks. For example, Zinch makes loan decisions in 24 hours and funds approved loans in as little as two days.
Get Funding for Your Small Business
Finding a small business loan doesn’t have to be overwhelming, especially when you work with the right lender. At Zinch, you’ll work with a real person — not an automated system — to determine the right loan for your business. We make it easy to apply for a loan and get your funds fast.
Ready to get started? Contact us at (714) 500-6622 to learn more about your options. You could qualify for up to $250,000 in just 24 hours.
