Updated: Mar 25
Small business loans can be difficult to obtain when you're just starting out. But fear not! There are a select few lenders who pride themselves on helping new entrepreneurs get off the ground.
In this article, we're going to discuss:
The best places to obtain a small business loan
The benefits of certain small business loans compared to others
Helpful & cost-effective tools that will assist you in managing and scaling your business
Table of Contents
Prerequisites for Small Business Loans
Before you can qualify for a small business loan, you'll need to meet a few requirements. Don't worry though, we've included links to solution providers that can assist you with overcoming each of these hurdles.
Banks can't write checks to companies that don't exist. Before you apply for a loan, it's a good idea to make sure that your company is registered as a legal entity.
For entrepreneurs in the UK, we strongly recommend 1st Formations. 1st Formations is one-stop-shop for all of your startup needs. In addition to registration and filing services, they offer bank accounts, domain names, address services, call answering, incorporation certificates, stock offering certificates, and VAT registration.
Entrepreneurs in the United States and elsewhere will likely have to piece together several solution providers to achieve the same results.
You'll need to have these documents ready before you can move on to the next prerequisite:
Registration Documents - Whether you're a sole proprietor, nonprofit, LLC, C-Corp or S-Corp, you'll need to register your business by filing documents with your local county office. Depending on how you want to register your business, these documents might include Articles of Incorporation, a Founders Agreement, a Single-Member LLC Operating Agreement or a Partnership Agreement.
DBA - The name of your business entity might be different from the brand name that your customers know. If that's the case, you'll want to file a document called an DBA (Doing Business As) so that you have a claim to the brand name. You'll need a DBA to sell anything through Amazon under your own brand name. Once you have your DBA, we strongly recommend purchasing the corresponding URL so that your customers can find you.
Business License - Depending on your industry, you may need to ally for a business license. Check with your local Small Business Administration office to see if your business requires a business license.
Seller's Permit - If your business involves the sale of any physical product in any public place, you'll likely need a Seller's Permit. Seller's Permits are one of the easier documents to obtain and are generally available online through your state revenue office for a small fee.
Trademark - If you plan on building a brand, it's a good idea to trademark your brand and logo so that no one else can profit off of your reputation. Trademarks and patents are available from the U.S. Trademark and Patent Office but are not necessary for all businesses.
Insurance is required for just about every business imaginable. Fortunately, companies like Thimble provide low-cost insurance products for small business owners on a monthly subscription basis. Their general and professional liability umbrellas cover contractors, photographers, personal trainers, event vendors, handymen, freelancers, and more!
Most small businesses require a general liability umbrella at the very minimum. Other businesses may necessitate more complicated insurance coverage.
A Business Bank Account
Small business lenders will usually only pay into a bank account that is registered under the legal name of the business. Personal bank accounts do not qualify.
Once you have your registration documents, you can open a business account at a bank.
If you get turned-down for a small business loan because of poor credit, don't despair! There are a number of reputable credit repair services that can help boost your score by deleting old information that may be dragging down your average.
Improving your credit will also earn you more favorable rates on your mortgage and car loans.
We recommend these credit repair services:
The Best Places to find Small Business Loans
The Small Business Administration's Lender Match tool can help you find local loan providers that are backed by the SBA.
However, private lenders tend to offer increased chances of approval, especially for new small business owners and small business owners with bad credit.
These are our top three most highly recommended small business loan providers:
Our overall favorite small business lender is Fundera. Their broad range of loan partners and ample industry experience has made them the undisputed front-runner in our line-up.
Fundera offers dedicated funding advisors who will work with you to make sure you get the funding you need.
In addition, they also offer funding alternatives like business credit cards, lines of credit, credit monitoring, and accounting solutions.
If you need working capital for your business, we highly recommend starting with Fundera.
Reasons We Like Fundera
Zero collateral required
Guaranteed by the SBA
Fundera also offers a wide range of non-loan options
Same-day funding (in many cases)
Uplyft Capital is the undisputed leader for short-term small business loans. Their application process is easy to navigate and streamlined for an unsurpassed user experience.
They offer a variety of pre-packaged loans with straightforward terms and reasonable rates.
The only reason we didn't consider them for our #1 position is that they deliver their loans in 1-2 business days and they do not offer same-day funding.
How to Get a Small Business Loan with Bad Credit
For entrepreneurs with less-than-perfect credit, there are still a few valid options for funding your business. These lenders typically offer loans at higher rates, but if you can't find cheaper money anywhere else, they're still worth considering.
Of course, you could always just hire a credit repair service to raise your credit score before applying for your small business loan.
But that's up to you.
Here are some funding options for small business owners who don't qualify for other small business loans:
One Park Financial is a non-bank lender that focuses on helping entrepreneurs who might have difficulty qualifying for a small business loan. In addition, they have a much more hands-on approach to their small business loans.
One Park Financial makes a point to mentor and teach their clients how to be successful in business whereas other lenders simply write you a check.
For newer entrepreneurs, their experience can end up paying dividends.
Creating a Business Plan
An adequate business plan needs to address a few basic questions:
Company information - What does the company do? How does it do it? Who are the founders? Who are the managers? What is the "mission" of the company? How does the company make money?
Market Analysis - Who are the company's competitors? What factors make your company better than theirs? Who are your customers?
Sales Analysis - How do we reach our customers? What are our sales goals? What are our marketing channels?
Financial Analysis - How much money does the company need to make to stay in business? How much money does the company need to get started? How much will the company pay its employees? How much money do you anticipate making in the future?
I Got My small business loan... Now what?
Once you've secured funding, you're ready to start making money! We've compiled a list of some of our favorite software tools for small businesses to help you in that endeavor.
These tools are all designed to save you time and money! The tools with the most universal utility are at the top. We hope these tools help you run a successful business!
QuickBooks is the undisputed industry leader when it comes to business management software. They make it easy to track income and expenses, pay employees & contractors, file taxes, and stay on top of your business performance. Regardless of what your business does, using QuickBooks to manage your finances is a wise decision.
For entrepreneurs who just want to run their business and not have to worry about finances, there's Xendoo. Xendoo is basically your own team of experts who oversees your finances on your behalf. They'll save you money on your taxes and help keep you organized so you can focus on the work of running your business.
GoToMyPC is remote desktop software that allows you to access your desktop computer from anywhere with an Internet connection.
Create your own legal forms, documents, and contracts with Legal Templates. This service is particularly helpful for any business that involves, rental properties, property transfers, or contracts; such as non-disclosure agreements or service agreements.
Square is the payment processor of choice for small business owners all over the world. Their innovative mobile readers make it easy to accept credit card payments from anywhere and their easy-to-use platform makes the entire process easy and simple. Tipping and returns are straightforward too, as is their onboarding process.
Termly offers free legal policies for websites, including Privacy Policies, Terms of Service, Cookie Consent, and more. Search engines reward websites with solid policy page by ranking them higher in search results, so if you have a website, make sure it's up to GDPR standards.
Want to share your business with the world? Consider sending a press release to major media outlets. eRelease Press Release Distribution will help you package your message and get the appropriate information to the people who make coverage decisions at newspapers and broadcast outlets.
Credibility is a key element in any successful marketing effort and nothing boosts your credibility more than being at the top of search engine results, i.e. Google, Bing, & Yahoo. SEMRush is an all-in-one suite for improving your online visibility. They offer tremendous insight into social media and SEO campaigns so that you can stay ahead of your competition.
The most complete collection of email & digital marketing tools is Constant Contact. This impressive suite of customer relationship management tools makes it easy to stay in touch with your customers and promote brand loyalty.
Manage all of your social media in one place with Sprout Social. This social media management tool lets you schedule posts in advance, collect viral content through RSS feeds, and post to all of your social media accounts at once. Plus, they have an impressive collection of analytics tools to help you gauge which content is having the greatest impact.
Create beautiful graphics in minutes with absolutely no graphic design skills! Canva has thousands of templates and a vast library of stock photos, fonts, and digital artwork to help you create engaging social media posts and every other type of graphic, including logos, package design, and web banners.