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How To Get A Small Business Loan

   Tuesday, 03 February 2015 00:00 PBC Blog

How To Get A Small Business Loan

It’s easy to get overwhelmed by the sheer number of documents that you need to get ready to apply for a small business loan. Whether you’re an established operation or just trying to get your foot in the door of an industry, the process to securing funds can be long and arduous--depending on who you’re borrowing from. Small business loans can provide the liquidity to grow by leaps and bounds, but you’ll want to make sure that you have everything that you need before spending months in the application process. A denial after that amount of time does more than just sting.

What Criteria Do Banks Look For When Making Small Business Loans?

Banks aren’t likely to just hand out money. The first step in getting a small business loan is qualifying based on set criteria. There are certain things that every borrower has to prove before they’ll be considered.

Location- Loans like this are only for businesses that operate within the United States.

For Profit-Small business loans are reserved for “for-profit” companies, so you must represent one of the eligible business types in order to be considered. This means that they don’t lend to charities or other organizations who fall under the “not-for-profit” umbrella.

Funds Allocation- You’ll have to be able to prove that you plan to use the funds for a purpose that has been approved by the lender. For instance, loans are rarely made if their purpose it to pay off another debt of some kind. In essence, you have to be using the funds for future growth and operational expansion. You can use it to hire staff, buy new equipment, build another location, and other, similar pursuits. A few cases exist that make it possible to borrow money in order to refinance existing debt, but the instances are limited and you must fall into a very slim category.

No Other Options- Most banks won’t lend to a small business if the money could come from somewhere else. If you have major investors who could supply the capital or a large amount of capital somewhere in the operation, then they aren’t likely to dole out funds.

Good Credit- Both the operation and the business owners have to have stellar credit to get a traditional small business loan. That means that everyone who has a controlling interest in the operation is under the microscope. If even one owner has a history of default, you could be stopped in your tracks.

Repayment- Operations have to be able to prove that they can repay the debt. If there is a significant chance of default, the small business won’t qualify. While paying back a loan seems like a no-brainer, it’s not always that simple. Banks have procedures that determine likelihood of ability to pay back the loan, and they can be very complex calculations.

Management Skills- When a small business borrows money, banks are relying on not only the potential profitability of the organization, but also the skills and character of the people in charge. They want to see a long history of management skills as well as a personal history of being responsible with money. If either are missing, the chances of getting a loan from a big bank can be slim.

Trajectory- Business owners have to prove that they know where they’re going. Getting a business loan without a business plan can be nearly impossible when you’re working with a big bank. A business plan illustrates the kind of growth that will require the funding that you’re asking for. Banks want to see that it’s possible to get where you say you’re going based on numbers, marketing plans, potential buyers and more.


We provide two highly accessible financing programs that can get your business the working capital it needs in days instead of months.

For a small business, obtaining a traditional loan today is a complex and difficult process. That’s where Premier Business Capital comes in. 

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