To successfully apply for a business loan, you'll first need to think through your financial needs, craft a business plan, and gather a variety of legal and financial documents ready.

Identify Your Needs

The first step in obtaining a business loan is deciding how much funding you need and what the money will be used for. The lender will ask you for this information, and how you answer could make or break your loan application. notes that lenders are more likely to approve a business loan to finance capital assets, real estate, long-term development or to cover seasonal sales variances. Banks aren't as willing to give funds to cover ongoing losses, finance regular operations, or purchase items that won't add value to your business.

Consider How You'll Pay It Back

To get approved for a business loan, you must convince the bank that you'll be able to pay back the loan. Fox Business recommends that business loan applicants craft a formal business plan that includes goals, action steps and resource allocation to show banks that they can pay back the money.

Use a projected statement of cash flows to determine how long you will need the money for and how much of a monthly loan payment you can afford. Use this data to create a specific plan to repay the loan.


If your projected financial statements and business plan aren't strong enough, the bank may require collateral or a personal guarantee for the loan.

Gather Necessary Documents

The U.S. Small Business Administration states that, although specific applications differ, most banks are looking for the same type of documentation. Before you apply for a loan, gather documents such as:

  • A business plan that includes projected financial statements.
  • Your personal credit report. Review the report ahead of time and contact the credit bureau if you notice any inaccuracies.
  • Your business credit report if you're already in business. Review this ahead of time as well.
  • Personal and business income tax returns from the last three years
  • Personal financial statements.
  • Your personal resume. Be sure to highlight your business experience.
  • Business financial statements, including the balance sheet, income statement and statement of cash flows.
  • Business bank statements.
  • Business legal documents, like business licenses, registration, Articles of Incorporation, significant contracts and leases.

Apply For the Loan

Contact banks in your area and inquire about business loans. You'll need to complete and submit a specific loan application form along with the necessary documentation. urges borrowers to contact as many banks as possible before accepting a loan proposal. George Cloutier, CEO of American Management Services, told that it's best to contact around 10 banks for a business loan. The more proposals you get, the better your chances are of getting a loan with a low interest rate that fits your needs.