While it’s rewarding to be your own boss, it does not come without its challenges! Small business ownership is demanding and requires prudent cash flow management. Getting a loan can provide you with the capital you need to successfully start and grow your small business in Ohio. If you’re new to the small business lending process and not sure how to navigate it, follow these steps to learn how to get a loan for your small business.
How to Get a Loan for Small Business in Ohio
- Determine the Right Loan for Your Small Business
As your business goes through various stages of growth, you may need to access working capital or commercial financing. There are many forms of funding available for Ohio small business owners. Figuring out which financing option is right for your small business is the first step to getting a loan.
The most well-known funding option is a business term loan. A term loan is a lump sum of capital issued to a borrower upfront. The borrower then repays the loan—along with interest and fees—at intervals over a set period of time. Typically, a term loan has a fixed or floating interest rate that can start as low as 6%.
Business term loans can be used to purchase equipment, hire employees, or renovate an existing office space. Term loans are generally used to fund one-time purchases or investments. Small businesses can access a business term loan through a bank, credit union, or online lender.
Securing a term loan, however, is not always possible for certain small businesses. Lenders prefer to issue loans to business owners with high credit scores, who have been in business at least two years, and who meet an annual revenue threshold.
If you don’t meet these criteria, or have already been denied a loan from a bank, consider applying for a loan guaranteed by the Small Business Administration (SBA). The SBA helps small businesses get funding that they might not otherwise be able to access through traditional lenders. Learn more about the different loan programs available to Ohio small businesses here.
- Be Prepared to Answer Questions About Your Small Business Loan
Banks want to feel confident that lending to your company is a sound business decision. Before meeting with lenders, be prepared to communicate how much money you need, why you need it, and what you will do with the financing.
If you haven’t already, write out your business plan and be ready to articulate it to the lender. This will show that you are conscientious and take your commitments seriously. The lender may ask you questions about your personal credit score, past financial challenges, financial projections, how you plan on producing a down payment, and business collateral. Be prepared to answer these questions comprehensively, as the lender needs assurance that your loan will be repaid.
- Find and Compare Small Business Lenders
Depending on your business’s unique funding needs, you may find that the products offered by one lender are more suitable for your business than another. That’s why it’s important to do your due diligence. Talk with multiple lenders and compare loan terms, rates, and fees. If you need help finding potential lenders, check out the SBA’s Lender Match tool.
4. Find and Compare Small Business Lenders
Once you’ve determined the right loan program and lender for your Ohio small business, you can begin the application process! As part of the loan application, you may be required to submit important business documents, including your financial statements, business and personal tax returns, bank statements, legal documents, and your business plan.
Get Started With A New Small Business Loan Application
By following these steps, you’ll be well on your way to getting a small business loan in no time! If you need assistance evaluating your loan options or applying for a SBA loan, contact the loan experts at Growth Capital Corp, a Certified Development Company, today.