Small Business Loans : What They Are and How to Apply for Them

It’s no secret that starting a small business can be tough and that a lot of businesses fail within the first few years (many within the first few months). 

Small Business Loans

Often, small businesses fail due to funding issues. In fact, 82 percent of small businesses fail due to cash flow problems. One of the best ways to prevent cash flow problems is to take out a Small Business Loan.

Small business loans help your company get its feet off the ground and invest in quality products and services that will allow you to grow at a steady rate. 

What is a small business loan? How do you apply for one? Check out this guide to learn everything you need to know about small business loans. 

What is a Small Business Loan? 

A small business loan is a type of financing that allows companies of a certain size to fund the startup or ongoing costs of running a business. There are several different types of small business loans you can take out, including:

  • Small Business Line of Credit: This works similarly to a credit card
  • Accounts Receivable Financing: This allows you to sell your outstanding invoices to lenders so you can get early payments for them
  • Small Business Term Loan: This gives you a lump sum of money that you’ll pay back at a fixed interest rate
  • Working Capital Loans: These loans allow you to finance the day-to-day operating costs 
  • Small Business Credit Cards: This is similar to a personal credit card, but it allows you to more easily track your spending and business expenses 

As you can see, there are a lot of loan options available. 

How Do You Apply for a Small Business Loan? 

The steps you take to apply for a small business loan depends on the lender you choose. Here are the different lending options:

Credit Unions or Banks 

Applying for a loan from a bank or credit union allows you to lock in a low-interest rate. To apply for this type of loan, you’ll need to fill out an application. 

You may need to offer collateral, and to increase your chances of acceptance, you should work on raising your credit score. 

Online Lender

Online lenders are available 24/7. Sometimes, you can access your funds in as little as a day. You may also want to look into RightWay Funding on LinkedIn

SBA Loan 

You can also apply for a loan through the Small Business Administration. This is a government agency that supports small business owners. Requirements for SBA loans vary from lender to lender, so be sure to do your research beforehand. 

US Department of Agriculture Loan 

You can get a loan from the US Department of Agriculture if you plan to start a farm. To apply, you’ll need to show proof of farmland ownership or intention to purchase farmland. 

To qualify for a USDA loan, your business needs to be in a rural area with a population under 50,000. 

Small Business Loans: Are You Ready to Apply? 

Now that you’ve read this guide on small business loans, it’s time for you to start applying. Pretty soon, you’ll have the capital you need to fund your business. 

Business checking is a specialized type of bank account designed specifically for businesses and other commercial entities. It serves as a primary tool for managing the financial transactions of a company. Business checking accounts offer various features and benefits tailored to meet the unique needs of businesses, such as handling payments, paying vendors, receiving customer payments, and managing day-to-day expenses.

Unlike personal checking accounts, business checking accounts typically have higher transaction limits and may require a minimum balance to avoid fees. They also offer additional services like online banking, mobile banking, and electronic payment processing, which facilitate efficient financial management for businesses. Business checking accounts help maintain a clear separation between personal and business finances, making it easier for entrepreneurs to track and report their financial activities accurately for tax and accounting purposes.

Check back in with our blog for more small business funding tips. 

I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin