How to Apply for a Bank Loan for My Business

Lenders offer a variety of different loan products to business owners in the U.S. Most banks have commercial lending divisions that cater to businesses needing loans in excess of $2.5 million and business lending divisions that handle smaller loans. Banks offer both unsecured loans and loans secured by real estate, equipment, vehicles and cash deposits. The U.S. Small Business Administration (SBA) partners with banks to guarantee loans for start-up businesses and other loans that do not meet banks' underwriting standards.

• 1

  Go to the bank and meet with a business banker. Tell the banker how much you need to borrow. If you do not have an immediate need for cash or are unsure of the amount, tell the banker you need a line of credit rather than a term loan. Give the banker your personal and business tax returns, personal financial statement and business cash flow analysis. The banker will send your information to the business underwriter for an assessment. Arrange for a second appointment.

• 2

  Go to the bank for your follow-up appointment. Based on the underwriter's analysis of your finances, the business banker will provide you with several loan options. Loans using property as collateral have the lowest rates. If you lack equity in your commercial building, you can borrow against your home. You can borrow against vehicles and some equipment, but the bank must inspect the collateral before agreeing to equipment loans.

  If you have operated the business for less than two years, you must apply for an SBA loan, because bank loans have a two-year seasoning requirement. The banker will give you the forms to complete an SBA loan file. Decide on a product and sign a loan commitment letter. The underwriting process for most business loans takes several weeks.

• 3

  Meet with the banker to close the loan. Make sure the loan documents match the terms you previously discussed. Sign the documents to complete the process.