How to Apply for a Commercial Loan

Small business owners often need commercial loans to start up a business or to expand an existing business and make it more lucrative. Commercial lenders will evaluate your reasons for borrowing, your business plan and your personal credit score when reviewing your loan application. It's important to choose the best lender for your borrowing needs and to ensure that your application represents your business well. Here's how to apply for a commercial loan.


  1. Image titled Apply for a Commercial Loan Step 1
    Establish your reasons for applying for a commercial loan.
    • Lenders will evaluate your reasons for borrowing money even if you don't know exactly how much you will need. Draft a letter of intent explaining why you need the loan. If you're starting a business, explain the areas of startup that require capital, like building maintenance and equipment purchases. If you're financing an existing business, document areas of improvement or expansion that will be funded with the loan.
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    Gather the necessary documentation to include with your application. Startup businesses will require personal financial records and existing businesses must provide records of business.
    • Include financial information for any individuals that will be major shareholders in a new company. This could include records of current financial debts and loans, credit histories, and personal tax returns. These documents are used to determine whether you and your business partners will be able to pay back the loan.
    • Existing businesses must provide balance statements, profit and loss statements, records of accounts payable, and tax returns. These documents are used by the lender to evaluate the current financial stability of your business.
    • You could also be asked to provide leases, documentation of your tax identification number or articles of incorporation if these documents apply to your business. Ask your lender if you need to include these in your application.
  3. Image titled Apply for a Commercial Loan Step 3
    Provide collateral.
    • Collateral consists of any types of funding that will be used to back or guarantee the loan. This could include property equity, savings, or available surplus cash related to the business.
  4. Image titled Apply for a Commercial Loan Step 4
    Write your business plan.
    • Commercial loan lenders will want to see a written plan that establishes how you see your business functioning and improving as a result of the loan. Where your reasons for applying reflect why you need the money, your business plan should reflect your goals for the business as a result of receiving the loan. Include projected revenue increases, financial plans or expansion projects.
  5. Image titled Apply for a Commercial Loan Step 5
    Consider several lenders, including your local banks and credit unions.
    • It might be easier to apply for a commercial loan with a smaller or local financial institution like your town's credit union than to apply with a nationwide bank. These smaller lenders tend to be more willing to lend to small business owners whose business growth will stimulate the local economy.
  6. Image titled Apply for a Commercial Loan Step 6
    Register with SCORE.
    • SCORE is a non-profit organization sponsored by the federal Small Business Association. It provides on line and local support to small business owners in areas like management and financing. SCORE has local chapters across the country, but you can also register on line and get commercial loan application help from on line counselors.
  7. Image titled Apply for a Commercial Loan Step 7
    Contact your local Small Business Development Center office for personal assistance in application process.
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    The federal Small Business Association has established Small Business Development Centers, or SBDCs, across the country to assist aspiring and existing small business owners in growing and financing their businesses. A local SBDC chapter can help you through the steps of applying for a commercial loan and help you find the right lender for your business.

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Categories: Mortgages and Loans