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    Three Important Things To Check Before Applying For Small Business Loans

    Small business loans are perfect for managing unexpected expenses, renovations, expansion projects, hiring new employees, and equipment purchases. Whether picking small business loans via loan matching platforms or applying to the Small Business Administration (SBA), it is important to be familiar with the accompanying qualification criteria.

    Given higher risks for lenders dealing with small business loans, it is crucial to cross-reference the eligibility requirements before applying for a small business loan. The following three-pointer checklist outlines the ideal business plan and records needed to receive rapid approval for financing.

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    The Three Checks to Handle Before Applying for Small Business Loans

    While there is a wide variety of small business loans available such as short-term loans, small business cash-flow loans, and business working capital loans, a business might not be necessarily eligible for all types of financing.

    Like individuals, businesses have accompanying credit scores. Business credit scores fluctuate from 0 to 100, however, that’s just one parameter lenders use to establish borrower eligibility. The following checklist highlights three verification checks designed to help ensure a business qualifies for SBA and similar small business loans.

    Establish Clear Goals and Objectives for the Loan

    Unlike a personal loan provider, business loan lenders need to know in-depth business details in order to offer a loan. Writing a business plan goes a long way towards reassuring lenders that a plan of action will accompany and financing. Hence, the following needs to be included when applying for a small business loan.

    • The intent for the loan money borrowed from the lender as certain lenders might place restrictions or conditions on how the funds should be used.
    • The ideal amount for a small business loan amount expected. Bear in mind that the maximum amount is $5 million for SBA loans. 
    • A business plan including the name, age, SWOT analysis, details and services offered by a business.

    Prepare Financial and Legal Documents

    Before applying for a small business loan, paperwork that helps value a business should be produced. Besides assembling these documents when learning how to make a business plan, online lenders and banks will request this very documentation before the underwriting process.

    • Business licenses should be produced with details about a business.
    • The turnover, yearly revenue, balance sheet, debt-to-credit ratio, commercial leases, business leases, tax returns, financial projections, as well as business credit score should be provided too.
    • Depending on the creditworthiness of a borrower, a lender may request collateral as security or a guarantee-statement from stakeholders with more than 20% shares in a company, and sometimes both for SBA loans.

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    Assess Lender Options 

    When debating lending options whether a bank, factoring firm, credit card company or online loan provider, asking the right questions is important. Before signing up for a loan, ask the following questions to every shortlisted lender.

    • How many small business loans have been provided till date?
    • What is the total years of experience of the staff handling small business loans?
    • What are the minimum and maximum ranges for loans offered to small businesses?
    • How many loans have been funded in a related industry?
    • What are the origination fees, closing fees, penalties and average APR rates of the small business loans offered?
    • How many days does it take to process and approve the loan?


    Understanding the financing objectives, assembling paperwork, and reviewing lenders in sequence will help secure financing designed to help small business grow. Make sure to tick all the boxes in the above list before applying for small business loans in order to ensure rapid loan approval and disbursement.