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Business Funding Resource Center

Small Business Loans

A business loan provides capital that must be repaid according to an agreement. Approval, pricing and terms depend on the lender, product, borrower and business. Owners should compare the complete obligation rather than focusing only on the advertised payment.

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01

Know what lenders may evaluate

A lender may review business and personal credit, revenue, cash flow, time in business, industry, collateral, ownership and the planned use of funds. Requirements vary.

  • Keep financial records current
  • Explain the use of funds clearly
  • Prepare ownership and registration documents
02

Compare the entire loan

Review the annual percentage rate when provided, fees, payment frequency, term, collateral, personal guarantee, prepayment rules and default terms. Fast funding may carry a higher cost.

  • Calculate total repayment
  • Confirm when payments begin
  • Read automatic withdrawal terms
03

Borrow against realistic cash flow

A loan should not depend on a perfect sales forecast. Test whether the business can make payments during slower months and after other operating expenses.

  • Prepare multiple cash flow scenarios
  • Protect payroll and essential expenses
  • Avoid borrowing merely to cover unexplained recurring losses

Frequently Asked Questions

Questions About Small Business Loans

Does a loan require collateral?

Some loans are secured and others are not. A lender may also require a personal guarantee. Review the exact agreement.

Will applying affect credit?

It may. Ask whether the lender uses a hard or soft credit inquiry before authorizing the application.

Make an Informed Decision

Verify the provider, terms and complete obligation.

This information is educational. Seek qualified financial, legal and tax advice before accepting funding or offering ownership.

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