A strong business credit score could mean that you don’t need to guarantee the loan with your personal assets. The exact documents required to get a business loan vary by lender. However, there are some documents that most lenders use to assess and verify an applicant’s identity and a business’ existence. Traditional term loans are lump sums that you pay back over time with interest and often have high borrowing maximums — SBA loans can reach $5 million, for example. Many lenders also offer specific products to fit a growing company’s needs, such as loans for equipment or vehicle purchases.

With invoice factoring, the business sells outstanding invoices to a factoring company, which becomes responsible for collecting payment. Explore financing options and cash flow strategies on Small Business Resources. Applying for a small business loan Expand this section to learn more about how to apply and the information you’ll need for your application. Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.

“I just couldn’t believe it,” Claudio, who pays $2,100 a month, told Business Insider. “I’m literally saving $700 to $800 a month on my mortgage payment. It’s a win-win situation, no matter which way you look at it.” The transaction is called an assumable mortgage, which has grown in popularity as rates have risen. There are several reasons why a business might need to obtain a loan with no money. You can use crowdfunding platforms like Kickstarter or Kiva to find interested parties. You usually reward your small business investors with perks like your product, swag or equity, depending on the level of investment. You’ll be expected to have a strategy for high growth in place to satisfy the investors.

Choose a type of loan

So they might not be offered as favorable a deal on a business loan. Almost any business can apply for a business loan, but a lender may require extensive documentation during the application process. The borrowed funds are made available as either a lump-sum payment or a line of credit. Businesses must then repay their lender according to the terms of the loan, which dictate the length of the repayment term and the interest rate charged. Crowdfunding offers startup founders a way to raise funds for their business without having to borrow from a traditional financial institution or friends and family. Business owners can start a crowdfunding campaign using an online fundraising platform like Kickstarter or Indiegogo. Alternatively, startup owners may consider borrowing money from friends or family to get their business off the ground.

How Do Business Loans Work?

While some may think of small businesses as solo practitioners or mom and pop shops, the Small Business Administration has a far broader interpretation. To qualify as a small business, a company cannot exceed standards for average annual revenue or average number of employees, depending on the industry. For example, soybean farmers are considered to be a small business up to $2.25 million in annual revenue, while flooring contractors are small up to $19 million in annual revenue.

Common Uses for a Business Loan

The overall time it takes to get a business loan depends on several factors, including the lender and type of loan. However, the business borrowing process typically takes anywhere from a few days to several months. Business owners who need to access cash quickly may need to work with an alternative lender or other financial institution that specializes in accelerated How Can I Get a Business Loan approval and funding speeds. Borrowers who need fast access to cash may benefit most from short-term lines of credit. While this type of financing comes with brief repayment terms—usually less than a year—funding times may be faster than for traditional lines of credit. In fact, borrowers may get access to their line of credit within hours of approval.

It can be difficult to get a small-business loan if you don’t have good credit and strong finances. It may also be difficult to get a loan if you are a new business. It can also be helpful to have a business attorney review the agreement. Organizations like SCORE can provide low- or no-cost access to small-business legal services.