How to Get Business Loans for Small Businesses in 2025
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Securing financing is one of the most important steps for entrepreneurs who want to start or grow their companies. But with so many loan options available, understanding how to get business loans for small businesses in 2025 can feel overwhelming.
From traditional bank loans to government-backed programs, online lenders, and microlenders, small businesses have more funding options than ever. In this guide, we’ll break down the loan application process step by step, explain what qualifications lenders look for, and share strategies to increase your approval chances so you can secure the right financing for your business.
What is a small business loan?
A small business loan is borrowed money that business owners use to start, operate, or expand their companies. Unlike personal loans, these are specifically designed for business purposes like purchasing equipment, hiring employees, buying inventory, or covering operating expenses.
Small business loans come in various forms, from traditional term loans that provide a lump sum to lines of credit that offer flexible access to funds. The key difference between business and personal financing is that business loans typically require information about your company’s financial health, not just your personal credit history.
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6 Steps to get your small business loan
Getting a business loan doesn’t have to be complicated if you follow the right approach. Here’s a step-by-step process that works for most small businesses.
1. Decide what type of loan you need to fund your business
The right type of business loan depends on what you’re hoping to accomplish. Different loans serve different purposes:
For large purchases or expansion: Traditional term loans provide lump sums that you pay back over time with interest. SBA loans can reach up to $5 million, making them ideal for significant investments.
For day-to-day expenses: Business lines of credit offer flexible funding that lets you tap into capital as needed for expenses like payroll or unexpected repairs. Working capital loans also work well for short-term costs.
For startups: New entrepreneurs often find success with business credit cards, personal business loans, or SBA microloans. These options have more flexible qualification requirements than traditional bank loans.
Consider what financing options make sense for your specific situation. A restaurant owner might need equipment financing for kitchen appliances, while a consulting firm might prefer a line of credit for operational flexibility. Understanding your business structure can also help determine which loan types you’re eligible for.
2. Determine if you qualify to get a business loan
Before you start filling out applications, it’s smart to figure out whether you actually qualify for a small business loan. Every lender has their own rules, so knowing where you stand can save you time, frustration, and hard credit checks that might hurt your score. Here are the key things lenders look for:
What’s your credit score?
Your personal credit score significantly impacts your loan approval odds and interest rates. According to Nerdwallet, banks prefer borrowers with credit scores of 690 and above for their best rates.
You can get your credit score for free from credit card companies or personal finance websites. If your score falls below 690, consider online business loans or microlenders, which often have more flexible credit requirements.
How long have you been in business?
Most online lenders require at least three months to one year in business, while banks typically want to see two years of operating history. Newer businesses should focus on lenders that specialize in startup financing.
Do you make enough money?
Lenders want proof your business generates sufficient revenue to repay the loan. Minimum annual revenue requirements vary widely, from $50,000 to $250,000, depending on the lender and loan type.
According to Investopedia, most lenders look for consistent cash flow that demonstrates your ability to service debt while maintaining operations.
Can you afford loan payments?
Beyond total revenue, examine your cash flow carefully. A good rule of thumb is that your total income should be at least 1.25 times your total expenses, including the new loan payment.
For example, if your business earns $10,000 monthly, that covers $8,000 in expenses. If you already pay $7,000 for rent, payroll, and other costs, you could afford a $1,000 monthly loan payment. Our break-even point calculator can help you analyze your financial position.
Estimate the cost of getting a business loan (business loan calculator)
Before applying, calculate the total cost of borrowing. Consider the interest rate, fees, and repayment terms. Nerdwallet’s online business loan calculator can help you estimate monthly payments and total interest costs.
Tip: QuickBooks Loan Manager helps small businesses calculate interest and payment schedules.
3. Compare small-business lenders
Different types of lenders serve different business needs. Understanding when to use each option helps you find the best loans for small businesses in 2025.
When to get a business loan from banks:
Traditional banks offer competitive interest rates, long repayment terms, and large loan amounts. They’re ideal if you have strong credit, established business history, and consistent revenue.
Bank of America, Wells Fargo, and other major banks provide term loans, lines of credit, and commercial real estate financing. However, their application process can be lengthy, and funding may take weeks.
When to get a business loan from the government:
Government small business loans 2025 options include SBA-backed loans through participating lenders. The SBA’s 7(a) program guarantees general business loans, while 504 loans help fund real estate and equipment purchases.
These programs offer low interest rates and favorable terms but have strict requirements and longer processing times. The application process can take several months.
When to get a business loan from online lenders:
Online platforms like Fundbox, OnDeck, and others provide faster approval and funding, sometimes within 24 hours. They’re more flexible with credit requirements and business history.
However, average APRs range from 14% to 99%, typically higher than bank rates. These work well when you need quick access to capital and can handle higher costs. PayPal’s business financing options are popular among online sellers and service providers.
When to get a business loan from microlenders:
Nonprofit microlenders typically offer startup business loans with no collateral requirements up to $50,000. Organizations like Accion Opportunity Fund and Kiva serve businesses that can’t qualify for traditional bank financing.
These loans often come with business mentoring and support services, making them valuable for new entrepreneurs who need guidance alongside funding.
Comparison of Small Business Loan Options in 2025
| Lender Type | Best For | Pros | Cons | Average Rates / Loan Size |
| Banks | Established businesses with strong credit | Low interest rates, large loans, long terms | Strict requirements, slow approval times | 6–10% APR; $50K–$5M |
| Government (SBA) | Businesses that meet SBA qualifications | Low rates, long repayment terms, support for real estate/equipment | Lengthy application process, more paperwork | 5.5–8% APR (7a loan); $5K–$5M |
| Online Lenders | Fast funding, newer businesses | Quick approvals, less strict credit requirements | Higher interest rates, shorter terms | 14–99% APR; $5K–$250K |
| Microlenders | Startups or underserved businesses | Loans as small as $500, support services included |
Small business loan comparison chart showing loan types and rates
4. Gather your application materials
Most lenders require similar documentation, though specific requirements vary. Here’s what you’ll typically need for your loan application:
- Business information (legal name, structure, industry, years in operation)
- Financial statements for both you and your business
- Tax returns (personal and business) for the last 2-3 years
- Bank statements from the last 3-6 months
- Details about business ownership structure
- Collateral information (if required)
- Personal guarantee documentation
- Business plan with financial projections
Tom, who owns a landscaping company, spent two weeks gathering documents before applying for his first business loan. Having everything organized upfront made the application process much smoother and showed lenders he was serious about his business. Creating a winning business plan can significantly strengthen your application.
5. Apply for a business loan
The application process varies by lender type. Online lenders often provide digital applications that take minutes to complete, while banks may require in-person meetings or phone consultations.
Before submitting your application, consider having it reviewed by a professional from your local Small Business Development Center (SBDC). These business counselors can help ensure your application includes everything lenders want to see.
Double-check all information for accuracy. Providing incorrect or outdated details can slow the process or result in automatic rejection, especially with lenders using automated underwriting systems. Consider how small business insurance coverage might strengthen your application by showing lenders you protect your business assets.
6. Review your loan agreement and get funds
Once approved, carefully review your loan agreement before signing. This document outlines all terms and conditions, including:
- Loan amount and disbursement schedule
- Interest rate and total cost of borrowing
- Repayment terms and schedule
- Fees and penalties
- Collateral requirements
- Personal guarantees
Don’t hesitate to ask questions or have a business attorney review complex agreements. Organizations like SCORE provide useful mentorships and resources for small businesses.
After signing, funds are typically transferred directly to your business bank account. Timeline varies from same-day for online lenders to several weeks for SBA-backed loans. Understanding how to avoid chargebacks becomes important once you start processing customer payments with your new funding.
Final Thoughts
Getting a business loan requires preparation, patience, and understanding your options. Whether you need quick working capital or long-term expansion funding, there’s likely a solution that fits your business needs and financial situation.
Take time to compare lenders, understand the true cost of borrowing, and ensure you can comfortably handle repayment obligations. The right financing can fuel significant business growth, but borrowing responsibly protects your company’s long-term financial health.
For businesses looking to streamline their financial operations, professional invoicing can improve cash flow and make loan applications stronger. Invoice Fly’s Invoicing Software helps create professional invoices that demonstrate organized business practices to potential lenders.
FAQs about Business Loans for Small Businesses
Qualification requirements vary by lender, but most look for a minimum credit score (typically 600+), established business history (at least 6 months), sufficient annual revenue ($50,000-$250,000 minimum), and ability to repay the loan. Banks have stricter requirements than online lenders.
Online lenders and microlenders typically have the most flexible approval criteria. Business lines of credit and merchant cash advances are also easier to qualify for than traditional term loans, though they often come with higher costs.
Yes, established businesses can apply for loans using their Employer Identification Number (EIN) rather than Social Security Number. However, most lenders still require a personal guarantee, meaning your personal credit and assets may be at risk.
Common disqualifiers include poor personal credit (below 550), insufficient business revenue, too much existing business debt, lack of collateral (for secured loans), incomplete financial documentation, or being in a high-risk industry like gambling or adult entertainment.
New LLCs should focus on lenders that work with startups: SBA microloans, online lenders with flexible requirements, or business credit cards. Having a solid business plan, personal guarantee, and some business revenue improves your chances significantly.
First-time business loan amounts typically range from $5,000 to $100,000, depending on your qualifications and lender. Online lenders often start smaller ($5,000-$50,000), while banks and SBA loans can provide larger amounts if you meet their requirements. Building a relationship with one lender can lead to higher amounts over time.
