How Do I Qualify For A Small Business Loan?

For so many business owners, the idea of qualifying for a small business loan is a stressful proposition. In order to mitigate much of this stress, the best starting point is by understanding the process in answering ‘how do I qualify for a small business loan?’. Unlike other unknowns, such as ‘how do I get a line of credit for my business’, this answer is much more straight forward.

3 Identification Steps to understand How Do I Qualify for a Small Business Loan


Step 1. Who Qualifies for a Small Business Loan?

Any person or entity who holds ownership in a small business can qualify for a business loan. This does not mean the small business entity needs to be incorporated. A sole proprietor, as well as any type of partnership, can qualify for a small business loan. In other words, the entity does not have to be incorporated. A very important aspect of determining if you can qualify for a small business loan is whether you have a business bank account. If revenue is deposited into a business bank account, you will likely fit the definition of a small business owner.

There are other variables that need to be satisfied as well. Some programs require at majority of ownership on the application. Other programs require 75-100% ownership interest. A few funding programs do not require a significant ownership interest. In addition, there is not single definition or set of parameters that establishes an entity as a small business. In generally terms, a small business will be any business entity that generates less than $50 million in annual revenue.

Step 2. What Types of Loans Qualify as Small Business Loans?

You have gotten to the point where you established your company will qualify as a small business under the definition. What loan products are available and how do I qualify for a small business loan product? The most obvious is the SBA loan. However, this is a longer process than generally funding and it is a much more difficult qualification criterion. There are lines of credit, accounts receivable financing and small business funding products. All these products are very useful, but some may be better for certain companies or industries or situations. Knowing your purpose (use of funds) and return (time and margin) will help determine which product is best.

Step 3. How Do I Go About Qualifying for a Small Business Loan?

Now that you have established you do operate a small business and you have an idea what product will be best for your business, it comes time to answer the bigger question: How Do I Qualify for a Small Business Loan?

We always recommend gathering all your pertinent information first. We recommend making sure you have your Tax ID Number available, as well as an idea of your gross annual revenue. We then suggest getting together 6 months of business bank statements. You may also need your most recent federal business tax return, most current balance sheet, and your Profit & Loss Statement (Year End for prior year and Year-to-Date for current year).

The process of how you qualify for a small business loan is simply if you work with a qualified business funding specialist. You will be required to fill out a short business funding application and present financial documents. An answer is usually provided within 48 hours and sometimes within 2 hours. This will tell you under what set of terms for which your business qualifies.

How Do I Qualify for a Small Business Loan is a mystery to many small business owners? Contact a funding professional that you trust to navigate through the details and suggest the best program for your business. You might be surprised how little stress and paperwork is involved. Once you receive your initial round of funding, you will easily be able to answer the question: How Do I Qualify for a Small Business Loan.