Funding your dream: How to apply for a business loan
You have the vision — now it’s time to make it happen with a business loan. Presented by Chase for Business
- When applying for a business loan, understanding different loan types helps you choose the right financing — whether it’s a term loan for major investments or a line of credit to manage short-term cash flow gaps.
- Lenders will be looking closely at a range of factors. Revenue, credit history, time in business and cash flow all play a major role in whether a business loan is approved.
- Preparation makes the process easier. Having financial statements, a business plan and key documents ready can help your business loan application move faster.
If you’re ready to apply for a business loan, it helps to know what lenders look at and what steps to expect. Whether you’re funding expansion, equipment or hiring, understanding the process up front can help you avoid delays and common missteps.
In this guide, we’ll walk through:
- What a business loan is and common types
- How to apply for a business loan, step by step
- Considerations and tips that can help improve your chances of approval
What is a business loan?
At its simplest, a business loan is a lump sum that a lender provides to a business with the expectation of repayment over time, usually with interest.
That general definition covers a wide range of financing options. Some types of business loans help businesses manage short-term cash flow, while others support larger investments like equipment financing or real estate.
For many companies, the right financing can give a good business plan room to grow sooner, rather than waiting years to save up enough funds.
Types of business loans
Before applying for a business loan, you should understand your options. Different loans are designed for different situations. The right choice depends on your specific goals.
Here are some of the most common types of business loans:
- Business term loans — a large lump sum to be repaid over a set period (anywhere from one to 25 years). Businesses commonly use term loans for major investments such as buying equipment, expanding locations or purchasing property.
- Business lines of credit — ongoing access to funds that a business can draw from when needed. Interest accrues only on the amount used, which can make business lines of credit helpful for managing operating expenses or short-term cash flow gaps.
- Equipment financing — loans designed specifically to purchase machinery, vehicles or other expensive equipment. The equipment itself typically serves as collateral for the loan.
- Commercial mortgages — loans used to purchase, refinance or renovate business real estate such as office buildings, retail space or warehouses. The property itself generally secures the loan.
- Accounts receivable financing — unpaid customer invoices used as collateral to provide cash to the business sooner. The lender advances money based on those invoices, and the funds are repaid as customers pay their bills.
- SBA-guaranteed loans — loans issued by lenders and backed by the Small Business Administration (SBA). Because the SBA guarantees part of the loan, lenders may offer longer repayment terms or lower down payments for businesses that qualify.
Chase for Business does not currently offer accounts receivable financing.
How do I apply for a business loan?
If you're preparing to apply for financing, the process usually follows a handful of practical steps. None are particularly complicated, but doing them in the right order can make the experience much smoother.
1. Start with a clear plan
Are you looking to expand, purchase new equipment, hire more employees or cover short-term operating expenses? Before approaching a lender, step back and ask yourself exactly what this loan will help you do.
From there, determine how much funding your business will need to accomplish that and how the payments will fit into your cash flow. Getting clear about the purpose, timing and size of the loan helps lenders understand how the financing fits into your broader business plan.
2. Compare lenders
Not all lenders operate the same way, and terms can vary more than many business owners expect. When deciding where to apply, consider comparing:
- Interest rates — the percentage you’ll pay to borrow the money. Even small differences in interest rates can significantly affect the total cost of the loan over time.
- Repayment terms — how much time you’ll have to repay the loan and whether payments are monthly, weekly or flexible. Longer terms may reduce monthly payments but can increase total interest paid.
- Loan limits — the minimum and maximum amounts a lender is willing to offer. Some lenders specialize in smaller working-capital loans, while others support larger financing needs.
- Fees — additional costs that may affect the overall cost of borrowing. Examples include origination fees, closing costs, prepayment penalties or late payment fees.
- Approval timelines and application process — how long it typically takes to review an application and fund the loan as well as how much documentation the lender requires.
- Customer service and support — whether you’ll have access to a banker or advisor who can answer questions and guide you through the process.
Banks and credit unions can often provide personalized guidance — and may already understand the business climate in your community.
3. Gather your financial documents
Business loan applications always require paperwork — there’s no way around it. While specific requirements vary, lenders will want to review documents that help them understand the financial health of your business. Most lenders will want copies of your:
- Business loan application — details about the amount requested. This includes how the funds will be used and how you plan to repay the loan.
- Business plan — a snapshot of your company background and growth outlook. Lenders will expect a clear business plan outlining how the loan supports your overall business strategy.
- Financial statements — anything that shows how the business is performing. This includes tax returns, current profit and loss statements, revenue projections and balance sheets.
- Personal financial information — a personal financial statement from co-signers or anyone providing a personal guarantee on the loan. Spousal information may also be required for shared assets.
- Collateral documentation — information about assets pledged as collateral, such as property appraisals or equipment valuations.
- Business registration documents — licenses, incorporation documents or other records confirming your business is properly registered.
Getting these materials together in advance can save a lot of time later. Use this business loan checklist to help make sure you’re gathering everything lenders typically ask for.
4. Submit the application
Once your documents are ready, you can formally apply. The lender will review the business loan application and supporting documents to evaluate your business’s financial standing and determine whether the loan meets its lending criteria.
Provide clear, accurate information to keep the review process moving and reduce follow-up questions during review.
5. Interview with the lender
In many cases, lenders will want to speak with you directly. This conversation gives them a chance to understand your business, your plans for the funds and how the loan supports your long-term goals. It’s also your opportunity to show them the person behind the paperwork — use this time to establish rapport and clarify anything that may help your case.
6. Get a decision
After reviewing your application, the lender can:
- Approve the business loan
- Offer different terms
- Request additional information
- Decline the application
If approved, you’ll receive a loan offer outlining the interest rate, repayment schedule, fees and any collateral or personal guarantee requirements. Review these terms carefully before accepting to ensure they align with your business’s financial plans.
If the application is declined, ask the lender to explain why. Understanding the reason — such as credit history, cash flow concerns or limited time in business — can help you address those issues and improve your chances of approval when you apply again or approach another lender.
7. Close the deal
Once everything is finalized, you’ll sign the loan agreement and any remaining paperwork. At that point, the money is typically deposited into your account or applied toward the purpose outlined in the loan agreement so you can begin using it.
From there, focus on pursuing the plan you made, and be sure to stay on top of your repayment schedule. Making payments on time helps build your business credit and keep future financing options open.
What lenders look for when approving a business loan
While each lender has its own criteria, they’re all ultimately asking the same question: Can your business repay what it borrows? A few factors play a big role in that decision. Here’s how to put your best foot forward:
- Build a track record
Businesses with several years of operating history often have an easier time qualifying for financing. If your business is newer, be ready to show strong revenue growth, signed contracts or other indicators that the business is gaining traction. - Show steady revenue
Lenders want to see that your business generates steady income. Stable or growing revenue trends can help demonstrate that the business can comfortably support loan payments. - Keep your credit in good shape
Lenders may want to see both personal and business credit scores. Paying bills on time, keeping debt manageable and reviewing your credit reports for errors before applying can strengthen your application. - Show predictable cash flow
Revenue is important, but lenders look closely at cash flow statements — how money moves through the business from month to month. Clear financial records and consistent operating cash flow help demonstrate that loan payments will be manageable. - Be ready to offer collateral
If your business has assets such as equipment, vehicles, inventory or property, using them as collateral can reduce the lender’s risk and may increase the amount you’re able to borrow. - Know when you may need a personal guarantee
Some lenders ask business owners to personally guarantee a loan, which means you agree to repay the debt if the business cannot. While this increases your personal responsibility, it can also help newer or smaller businesses qualify for financing when other collateral is limited.
Common mistakes to avoid when applying for a business loan
Even well-run businesses sometimes hit roadblocks during the loan process. Fortunately, most common problems are avoidable.
Here are a few pitfalls to watch out for:
- Choosing the wrong type of loan
Different loans serve different purposes. Applying for financing that doesn’t match your business need can slow the process or lead to rejection. - Borrowing more than your cash flow supports
It can be tempting to request extra funding “just in case.” But lenders will closely examine whether your business can realistically handle the repayment. - Providing incomplete or inaccurate financial information
Missing documents or outdated financial numbers can raise questions and delay the review process. - Not comparing lenders
Interest rates, fees and repayment terms can vary widely. Exploring multiple options may help you find a better fit. - Waiting until you urgently need the money
Financing is typically easier to secure when your business is performing well — not when you’re already under financial pressure. - Offering vague plans for how the funds will be used
Lenders want to see that the loan supports a clear business goal or need, such as expansion, equipment purchases or working capital.
A little preparation can go a long way toward making the application process smoother.
Where to get help applying for a business loan
Applying for financing doesn’t have to be a solo effort. Several resources are available to help you talk through your options before applying. Even a short conversation can make the process feel less intimidating.
- Banks and lenders
Business bankers can explain loan options, answer questions about requirements and help guide you through the application process. - Credit unions
Many credit unions offer small business loans and may provide more personalized support for local businesses. - Small Business Development Centers (SBDCs)
These federally supported centers offer advisingOpens overlay that can help business owners prepare financial projections, refine business plans and get ready to apply for financing. - SCORE mentors
SCOREOpens overlay connects entrepreneurs with experienced volunteer mentors who can provide guidance on business planning, financing and growth. - Women’s Business Centers (WBCs)
WBCs provide training, counseling and financial guidance tailored to women entrepreneurs. - Minority Business Development Agency (MBDA) business centers
MBDA centersOpens overlay help minority-owned businesses access capital, prepare loan applications and connect with financial institutions. - Community Development Financial Institutions (CDFIs)
CDFIsOpens overlay are mission-driven lenders that focus on supporting small businesses in underserved communities and may offer alternative lending options. - Financial advisors or accountants
Professionals familiar with your finances can review financial statements, help prepare projections and ensure the numbers in your application are accurate. - Local chambers of commerce or business associations
These organizations may provide resources or host workshops and networking events to connect you with lenders, advisors and other business owners.
FAQs about applying for a business loan
How long does it take to get a business loan?
The length of time depends on the lender and the type of loan. Some smaller loans or lines of credit can be approved in a few days. Traditional bank loans often take a few weeks, especially if the lender needs to review financial documents or collateral. SBA-backed loans may take longer because they involve additional review.
Where can you apply for a business loan?
You can apply through banks, credit unions and online lenders. Many business owners start with their own bank, which may already be familiar with their accounts and financial history.
How do you qualify for a business loan?
Lenders usually look at a variety of factors, such as your revenue, credit history, time in business and cash flow. In simple terms, they want to see that your business generates enough income to comfortably repay the loan.
What disqualifies you from getting a business loan?
Common reasons for disqualification include poor credit, inconsistent cash flow, limited time in business or high existing debt. Missing financial records or incomplete applications can also slow down or prevent approval. If this happens, ask the lender which factors affected the decision so you know what to improve before applying again or exploring other financing options.
