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How to Apply for a Business Loan

By
Lia Kopin-Green
/
January 23, 2023

Are you ready to take your business to the next level, but you’re still in need of financial assistance? You may want to consider applying for a business loan. Although the process can seem daunting, with the right information and proper legal support, you’ll soon be on the way to starting your own business. Here is a brief guide that will help you navigate the process of applying for a business loan in the United States.

1. Decide Where to Apply

When looking for a business loan, deciding which bank to choose can be challenging, as there are many different options available. Nonetheless, it is important to keep in mind that the best place to apply for a business loan will typically be wherever you qualify for the lowest interest rate. Making a properly informed decision requires examining interest rates at multiple institutions. You should also examine other vital factors, such as the exact type of funding you are looking for, how soon you need the loan and how strong your business’s finances are.

2. Determine What Type of Loan You Need

The term “business loan” covers a number of different types of financing. To make sure your business's needs are best met, it is important to be familiar with the main types of loans available. These options include:

  • Small Business Administration (SBA) loans
  • Microloans
  • Personal loans for business use
  • Business lines of credit
  • Equipment financing

With so many options available, it can be challenging to pick the type of loan that best fits your needs. Consulting with a specialized business attorney may assist you in determining the optimal choice for your business.

3. Check Eligibility

Determining your eligibility is a crucial step in deciding where you should apply for a business loan. Business loan requirements vary depending on the institution. However, the main factors that lenders may consider when reviewing your application include your credit score, collateral or personal guarantee, annual revenue and the age of your business. For instance, traditional banks generally require that your business has been active for at least two years. Additionally, some lenders may force you to pledge collateral that can be seized if you default on your loan.

4. Gather Documents for Your Application

Having decided which lender to work with, it is time to begin preparing your application. This process usually begins by gathering important documents such as your personal and business tax returns, articles of incorporation and association, financial statements, profit and loss statements and personal and business bank statements. If you are unsure regarding which specific documents you may need to submit, consult with a professional business attorney.

5. Fill Out the Application

Filling out a business loan application may take some time. However, as long as you’ve gathered the proper documentation in Step 4, this task will be a bit less tedious. During this stage in the process, you will be asked to fill out forms either online on a computer or in person with pen and paper. Although the exact contents of the application vary depending on the lender and type of loan, the document typically includes questions about your business, financial details and the amount of money you are looking to loan.

6. Wait for a Response

Depending on the type of loan you chose, you can expect to wait anywhere between a few hours to several weeks to hear back from the lender. In some cases, the institution may run an initial examination before asking for additional documentation. If the lender asks you to provide more information, make sure that you respond quickly to avoid further delays in your application approval process. 

7. Sign the Loan Agreement

Once your loan has been approved, the lender will send a loan agreement, usually via email. At this point, the only task remaining is to sign the loan agreement. You will then begin to receive funds based on the arrangement stipulated in your agreement with the lender. Accordingly, you will also start to make loan payments as per your repayment plan.

Seeking Legal Support

Applying for a business loan can seem intimidating at first, but with the right preparation and guidance, the process can run smoothly and quickly. By investing the effort to apply for a business loan in the right way, you are increasing the probability of getting approved and obtaining the necessary funds to expand your business.

If you are looking for legal support in applying for a business loan, or if you have any other questions about starting your own business, contact one of our expert business lawyers today at Attorney At Law. One of our skilled attorneys would be delighted to provide assistance as you navigate this journey.

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