Business Loan Basics


A business owner stands in front of the blue door to her business as she holds a sign that reads "Welcome! We're open!"

What to expect when applying for a business loan.

Applying for a business loan can feel intimidating. But approaching the process knowing what to expect can help you feel more confident and at ease. Discover these tips to help you feel prepared before applying for a business loan.

Gather your documentation

Any lender considering the credit worthiness of your business will want to see a track record of your business operations for at least two years, including financial statements and annual revenue.

You will also need to present the lender with a business plan and loan proposal. The business plan should outline how you make money, how much and how often, also known as cash flow, specifics about your industry and its size, as well as how you plan to use the loan.

A lender is ultimately looking for evidence and a solid plan that your business will be able to repay the loan. Additionally, they will check both your personal and business credit scores.

Other documents you’ll typically be asked to provide are personal and business income tax returns and bank statements and commercial leases.

Identify assets that could be used as collateral

While some business loans are unsecured and don’t require collateral, others do. Often, the asset to be purchased with the loan serves as the collateral. However, assets such as real estate, equipment and inventory might also be used to secure the business loan.

Keep in mind, not all business loans require collateral. A lender may simply require a personal guarantee. This means if the business doesn’t repay the loan, you will pay back the debt from your personal assets.

Eligibility varies among loans

Business loans take many forms: a business line of credit, SBA loans, commercial real estate mortgages, equipment and vehicle loans, as well as business credit cards.  As you’d expect, the eligibility requirements vary for each type of business lending.

For example, SBA loans are government-backed loans that can be used for specific uses by for-profit business with a tangible net worth under $15 million and yearly net profit after taxes not to exceed $5 million during the last two years.

When seeking a business loan, identify which loan product matches your need. Then talk to a lender to learn what they require to qualify.

Consumers has the answers

One of the best things about doing business banking with us is that the Consumers commercial loan officers all live and work right here in Michigan. All underwriting and approvals are done in-house by folks who get to know our business members personally. And, our team loves to help first-time business loan borrowers by answering any and all questions, identifying loans that match a specific need as well as coaching business owners through the application process.

Do you have business banking questions? Contact our knowledgeable Commercial Loan Officers online or call 800-991-2221. We’re also available to help in person at your local office.

Federally insured by NCUA

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