Apply for a Business Loan: Put Your Best Foot Forward


When you apply for a business loan you must choose the right lender, have a clear plan for use of the funds; document your ability to repay them; provide extensive financial data on you and your business; and present yourself as a creditable, trustworthy borrower. Lenders want to loan money, but they are always looking to minimize their risk. You must put your best foot forward.

Choose the Right Lender

Not every lender does every kind of loan. Many small banks focus on consumer lending. Certain branches of large banks will refer you to another branch. As you evaluate options to apply for a business loan, choose a lender active in your industry, experienced working with businesses the size of yours and focusing on businesses borrowing the amount you need. The first good step you can make is to approach a lender with knowledge about their market. 

Know Why You’re Borrowing

Traditional business loans - as opposed to a line of credit or sweep account - will be for a specific purpose. The more specific you can be as to why you need the money and what you intend to do with it, the better chance you have being approved for a loan and the better interest rate you can be offered. Loans represent risk to a lender, and the higher the risk the higher the interest rate.

When you apply for a business loan, expect to document:

  • the specific amount you need
  • a detailed account of how the money will be used
  • why the funds are needed now
  • how use of the funds will improve your business.

Document Your Ability to Repay

Your capacity to repay a loan is the key point for the lender. To put your best foot forward as you apply for a business loan, show up with all necessary financial documents to establish your business’ ability to make payments on the loan you’re seeking. Call ahead to get the lender’s requirements and have them all on hand.

Additional Business Data

The lender will want to see the obligations your business has, the collateral to back the loan, the structure of your business and more. Again, call to get the lender’s requirements, but expect to provide:

  • incorporation documents
  • partnership agreements
  • licenses to operate
  • leases
  • tax statements
  • profit and loss statements
  • a balance sheet
  • franchise agreements
  • contracts with suppliers
  • other loan obligations
  • a list of pending obligations or projects

Project Professionalism

No level of professional appearance will overcome poor financials. Your business’ financial condition is a critical factor in a lender’s evaluation. But the first factor is how you appear and the second factor is the condition of your application package.

Dress appropriately and well for your meeting. Be certain to be on time. Be prepared.

Additionally, when you apply for a business loan, your loan package should begin with a professional appearing letter, detailing what is in the loan package. Documentation should be in good condition and easy for you to access. You must be knowledgeable about your documents.