As a small business owner, you may encounter situations where it's helpful to have additional cash on hand to manage the ups and downs of your operation.
A business loan may provide the cash flow you need to help:
In this guide, we'll help you understand what questions to ask when evaluating a business loan, loan option considerations, and how to get the application process started.
Understanding small business loans starts with evaluating what you need. Before applying for a business loan, first assess your current financial situation and requirements so you can focus your effort on applying for the business loan that best fits your needs.
This process can help you create an understanding of what you need and what you'll use the financing for. This step may reveal that a loan isn't necessary, you need a smaller amount than originally anticipated, or that the money can be found in other ways, such as bootstrapping, grants, or fundraising.
Asking some of these questions may help you assess your financing needs:
Once you've determined your needs, you should understand some factors that small business lenders look for when evaluating applicants:
Make sure you understand the different types of small business financing options available and choose the one that makes the most sense for you. Some of the most common small business loans include:
There are many different types of small business loan you can choose from, each with its own advantages/disadvantages, depending on your needs. Options include:
No matter what type of financing you decide to pursue, small business financing solutions require some basic information to determine if your business is eligible. You can check your business loan eligibility using this tool.1 The SBA also has a checklist of items you'll need to be prepared to share during their small loan application process, including:
Small business financing solutions can have a wide range of cost structures. Make sure you fully understand your business loan costs:
Once you've collected your information and chosen a lender, it's time to fill out the application. Keep in mind that each lender will have their own application process. Each lender will have its own process for making a decision, along with its own timelines.
Don't let the process of applying for a business loan overwhelm you. The same persistence you used to start your business will help you navigate the business loan application process.
In partnership with three expert business owners, the PayPal Bootcamp includes practical checklists and a short video loaded with tips to help take your business to the next level.