Get Small Business Loan

Updated: February 26, 2024
by Ray Alexander

Get small business loan? Starting a small business is quite the adventure, isn't it? In the early days, finding your feet and making your mark can feel a bit of a tightrope walk. And let's be real, cash flow is often the biggest hurdle. You've got dreams to grow, but sometimes the wallet says, "Hold up." This is where a small business loan can come into the picture, giving you that much-needed boost. But, I think, there's a bit to consider before financing your startup.

Get Small Business Loan

Did You Know?

  • Startups Seeking Loans: Approximately 29% of startups seek external financing to manage their operations and grow.
  • Approval Rates: Big banks approve around 13.6% of small business loan applications, while smaller banks approve closer to 18.7%.
  • Interest in SBA Loans: Small Business Administration (SBA) loans, known for favorable terms, see high demand, with thousands of applications yearly.
  • Success Rate of SBA Loans: The SBA approves about 50-70% of loan applications, depending on the specific program and year.
  • Average Loan Amount: The average small business loan amount is approximately $633,000 for traditional bank loans but varies widely by lender and loan type.

The Early Days of Your Business

In those first 12 months, it's all hands on deck. Revenue might be trickling in, but expenses? They're like a flood. You've got rent, supplies, maybe some staff, and a whole lot of ambition. It's a crucial time, hugely impactful on your future success. And here's the thing, most businesses need a bit more financial oomph to get through this phase. That's normal, right?

But getting that extra cash can feel a bit daunting. You're already juggling a million things, and now you've got to think about loans? Well, yes, but it's not as scary as it sounds. A business loan can be a lifeline, giving you the room to breathe and grow. You see, it's about finding the right fit for you and your business.

CyberCash Wonderland

Max, Ready To Plan His Revolutionary Business Plan

Revolutionary Protein Bar Business Plan

Bank Manager: So Max, we need a clear understanding of your protein bar business and its potential before we can lend you any money. Can you explain how it will generate revenue?

Max: Well, it's revolutionary. Really different. Like, nothing like anything out there!

Bank Manager: Can you give me specifics? What problem does yours solve that existing protein bars can't?

Max: Uh, it's just... disruptive. You know, it disrupts the market.

Bank Manager: Disruption isn't exactly a strategy, Max.

Max: Look, I just know this is gonna be huge! People are gonna love it!

Bank Manager: I appreciate your time, Max. Unfortunately, I don't see the potential here that you do.

Max: Wait! You don't understand! This is gonna be the next big thing!

Getting a Business Loan

So, you've decided a loan might be the way to go. Great! The next step is figuring out where to get one. The landscape of business loans is vast, with options ranging from traditional banks to online lenders. Each has its own vibe, requirements, and speed of service.

Traditional banks might give you that sense of security, but they can be a bit slow. And if you're in the hustle of the first year, time is something you don't have to waste. Online lenders, on the other hand, tend to make things quicker and easier. They're all about getting you what you need without the endless paperwork and wait times. Sounds good, right?

Did You Know?

  • Startup Financing Needs: Over 80% of startups report needing funding to get their business off the ground.
  • Use of Personal Funds: Roughly 77% of small business owners use their personal savings for initial funding.
  • Credit Score Importance: A credit score above 680 significantly increases the chances of loan approval at most traditional banks.
  • Alternative Lenders: Alternative lending platforms have higher approval rates, sometimes as high as 56%, but often come with higher interest rates.
  • Online Lenders' Speed: Online lenders can often provide a loan decision within 24 hours, making them a popular choice for quick financing needs.

The Application Adventure

Now, onto the application itself. This part can seem huge, but it's manageable, I promise. The key is preparation. Most lenders want to see your business plan, understand your cash flow, and get a sense of your creditworthiness. It sounds like a lot, but it's really about telling your story – where you're at, where you're headed, and how their money will help you get there.

The beauty of modern lending, especially with online options, is that they've streamlined this process. You can often apply in minutes, uploading documents directly through their platform. Quick, easy, and painless. Just what you need when you're already wearing too many hats, isn't it?

Keeping It Real

Here's the thing about loans – of course, they're not free money. You've got to pay interest on top of the capital repaymen. So while it's hugely tempting to go for that big amount, it's crucial to keep it real. Borrow what you need to achieve your goals, not so much that you're under a mountain of debt.

Understand your cash flow, project your growth, and figure out what repayment looks like for you. Like a road trip – you need to know your route, your stops, and how much gas you'll need. There might be bumps along the road and you need to get to where you're going, right?

Did You Know?

  • Loan Purpose: 43% of small business loans are used for expanding the business or purchasing equipment.
  • Repayment Terms: Average repayment terms for small business loans range from 1 to 25 years, depending on the loan type and lender.
  • Interest Rates Variation: Interest rates for small business loans can vary from as low as 2-3% for SBA loans up to 80% or more for certain short-term loans from alternative lenders.
  • Failure to Secure Loans: Approximately 20% of small businesses fail to secure the financing they apply for.
  • Impact of COVID-19: During the pandemic, the demand for small business loans increased significantly, with the Paycheck Protection Program (PPP) issuing 11.8 million loans totaling about $800 billion.
We Can Lend You Unconditionally

"We can lend you unconditionally, with a 50% APR."

Avoid Non-Bank Lenders If You Can

When I say "non-bank" lenders, I mean;

  • Peer-to-peer (P2P) lenders: They connect borrowers with individual lenders directly.
  • Fintech lenders: They use technology to offer financial services, including loans, often with faster approval times and more flexible terms.
  • Microlenders: Specialize in small loans for individuals or businesses, often in underserved communities.
  • Payday lenders: They lenders offer short-term, high-interest loans that are typically due on the borrower's next payday.

Avoid using them if you can. They always offer a quick and easy solution when you're in a pinch, right? But here's the deal:

  • They often charge sky-high interest rates.
  • Their aggressive repayment schedules can be tough to keep up with.
  • Some might not play by the rules, leaving you in a risky spot.

It's a bit like finding water in the desert, only to realize it's a mirage. Sure, it looks promising at first, but it's not what it seems.

Stick with the Good Guys

Now, why choose a reputable bank over a flashy offer from a lender who might not have your best interests at heart? Well, for starters:

  • Banks are regulated, which means they have to follow strict rules that protect you, the borrower.
  • They offer clearer terms and conditions, so you know exactly what you're signing up for.
  • If something goes wrong, you have more avenues to seek help or make a complaint.

It's a bit like choosing a reliable car over a flashy one that might break down any minute. Safety first, isn't it?

Did You Know?

  • Women-Owned Businesses: Women-owned businesses receive only 16% of all conventional small business loans.
  • Minority-Owned Businesses: Minority-owned businesses are three times more likely to be declined for a loan than non-minority firms.
  • Loan Default Rates: The average default rate for small business loans is around 2.5%, but this varies by loan type and economic conditions.
  • FinTech Growth: The FinTech industry has seen a surge, with a 500% increase in lending to small businesses over the past decade.
  • Future Trends: Predictions indicate that digital lending platforms will continue to grow, potentially accounting for over 20% of the small business lending market in the next few years.

Read the Fine Print

One of the biggest perks of going with a reputable bank is that they're required to be transparent about all the terms of your loan. This includes:

  • Interest rates that are fair and regulated.
  • Repayment plans that are realistic and manageable.
  • Fees and charges that won't leave you gasping for air.

Taking the time to understand these details can save you a huge headache down the road, you see?

Building a Relationship

Finally, there's something to be said for building a relationship with your bank. When you work with a reputable institution:

  • They get to know you and your financial history.
  • You can work together to find solutions that fit your unique situation.
  • Over time, you might qualify for better rates or more favorable terms.

CyberCash Wonderland

"I Cannot Pay Back My Loan!"

I Cannot Pay Back My Loan!

Alice: ...I understand, but I can't just conjure up the money, my darling. No, I can't take out another loan! That's the whole problem! I'm drowning in debt already. They're going to take everything, Ben. The car, the apartment... 

Ben: Hey, hey, it's not that bad, right? They were just threatening, that's their tactic. We'll figure something out.

Alice: Oh, great, another "we'll figure something out." Because that's been so helpful so far.

Ben: I know this is stressful, honey. But we have to stay calm. Look, maybe they can work out a payment plan...

Alice: A payment plan? Darling, I can barely afford rent and groceries right now, how am I supposed to manage another bill on top of everything else?

Ben: We'll face this together. Let's think about it together, okay? We'll call my sister, maybe she can offer some advice. We'll figure this out, I promise.

Can You Really Pay It All Back?

Yes, it's doable with the right approach. Know. your numbers inside and out. This means:

  • Keeping track of your income and expenses
  • Understanding your monthly cash flow
  • Projecting future sales and growth

By getting a clear picture of where your money comes from and where it goes, you can make informed decisions. And when it comes to loan repayment, these decisions are what stand between you and a stress-free sleep at night.

Planning for Repayment

Now, onto planning for repayment. This part is all about looking ahead and being realistic about what you can afford. Consider the following:

  • Set aside a portion of your income specifically for loan repayment.
  • Look at your budget and see where you can cut costs without hurting your business.
  • Think about setting up an emergency fund, just in case things don't go as planned.

You can do it in a way that doesn't put your business or personal finances at risk. A bit of foresight can go a long way, right?

Your Lender Is (Fairly) Flexible

If you anticipate problems with your repayment schedule, it's better to talk about it sooner rather than later. Here's why:

  • Lenders might be able to offer you flexibility with your repayment terms.
  • They could provide valuable advice or solutions you hadn't considered.
  • Being upfront about difficulties can help maintain a good relationship with your lender.

After all, lenders want you to succeed; when you do well, they do well, isn't it?

Growth and Reinvestment

Finally, let's talk about growth and reinvestment. This part is exciting because it's where you see the fruits of your labor. To ensure you can repay your loan, consider:

  • Reinvesting profits back into the business to stimulate growth
  • Exploring new markets or product lines to increase revenue
  • Continuously looking for ways to improve efficiency and reduce costs

You're determined to strengthen your business's foundation so that repaying your loan becomes a part of your success story.

Repaying a business loan might seem daunting at first, but with careful planning, a solid understanding of your finances, and open communication with your lender, it's more than possible. It's an opportunity to prove to yourself (and the world) that your business can thrive, even with a little borrowed help. Keep an eye on the prize, stay focused on your goals, and remember, every payment made is a step towards your bigger vision.

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About the Author

ASD. Recovering alcoholic. LGBTQ+ advocate. Semi-retired. 15+ years of web-designing experience. 10+ years affiliate marketing. Ex-accountant. I'm nice and real. Ask me if you need any help in starting up your home business.

Thank you for your Comments!

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  1. That’s good to know that you could get the funds within two business days. I would think that would let you get in business much faster. I’ll have to consider getting a business loan if I decide to start a store.

  2. There are many businessmen or women who need a quick business loan but have been rejected by their banks. Many of us need a loan to start or expand the business, or open up more business locations. It is hard to get the loan so quickly because I have been there. Very high interest rate like 3% or maybe more. Most of them are scammers.

  3. I’m Indian and small business man I need business loan because my present business is expendsion now but my present economy condition is low, please please help me and section my business loan as early as possible,
    Thanks You Dear Sir

    1. As you can see from my post, I’m not a loan provider. External factors such as economy should never be the reason for borrowing, you know that. With a clear plan of repayment, there should be someone who will approve your application out there. Good luck!

  4. Hi,Ray Alexander

    I’m trying to restart our business plan so I can get financed for a Export Import and Real estate business with a strong focus on sustainability.
    then i want business Loan but i have a bad credit how can possible. loan

    I read your review, but I’m still left with a serious question – how do I prepare my business plan in a favorable light? is CAN able to help me as a partner or am I better off just submitting an application and hoping for the best?

    1. Hi Akram, thanks for leaving a comment. Your questions – I think you already know the answers…

      How to get a loan; No legitimate lender will be willing to lend you money while you have a bad credit record. You need to gain a trust by clearing the bad record first, and

      How to prepare such a risky business (means borrowing money that you may not be able to pay back); no one will tell you the secret, you need to work out yourself. Otherwise you can always start a smaller business that does not require a capital.

      This particular company (CAN Capital) only lends money to borrowers in the US. There are so many lenders around, so you can perhaps tell them your circumstances and see what they say. I’m not a specialist (sorry), the lenders can tell you exactly what you should do.

      Thanks for your visit!

  5. I have a small media training centre and a workshop established over 12 years ago, considering about taking up a loan to expand the business. Please kindly advise me if my small business is eligible.

    1. Hi Bambang, I’m not a loan lender, broker or advisor. You can only apply and see. Established provider such as CAN Capital will go through a formal review process, so if they decide to disapprove your application, it’s a useful signal that your original repayment plan was unrealistic. If you decide to go for a smaller lender, make sure you’re not overestimating your business plan!

  6. Hi Raymundo

    It is good to see that there are still companies that are willing to lend money to startup entrepreneurs.

    A starting capital is very important and this can mean the difference between success or failure. I also agree that Can Capital looks like the best one to try out. Thanks for pointing these companies out.

    1. Hi Viljoen, thanks for your comment, yes any entrepreneurs experience taking some level or risks, and the liquidity & access to cash is important, so it’s always good to know there are lenders who can approve your loan application quickly.

      Thanks for stopping by.

      Ray

  7. Hi,

    I’m trying to prepare a business plan so I can get financed for a beverage bottling business with a strong focus on sustainability.

    I read your review, but I’m still left with a serious question – how do I prepare my business plan in a favourable light? is CAN able to help me as a partner or am I better off just submitting an application and hoping for the best?

    1. Thanks for your comment. With regard to your question, no, CAN is a loan provider so you need to appeal yourself against them (they need to trust you so that they can loan you money), means your business plan would have to be prepared elsewhere. There are a lot of independent advisers around, or online tutorials and easy comprehensive guides such as;

      http://www.startupdonut.co.uk/startup/business-planning/writing-a-business-plan

      Having said that, submitting a business plan is not CAN’s strict requirement. You need to let them know of your plan within your online application form. It is a great opportunity to draw up your own business plan though – everyone does it, to let your profitability grow steadily.

      Thanks again, any more comments/questions, please don’t hesitate!

      Ray

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