For years, small business loan applicants only considered low rates and long terms when looking for a loan. However, today, more and more consumers are also considering speed, flexibility, and certainty. SmartBiz Bank® understands that when you need funds, you need them as quickly as possible.
Before you start the application process, there are some things you may be able to do to make the business loan process easier and improve your chances of getting approved. Here are five steps to take before you apply for your SBA loan with SmartBiz.
How to qualify for a small business loan in 5 steps
While most loans require a good credit score, beyond that, qualification criteria can vary. That’s true both when comparing two loan types and two loans of the same type from different lenders. But you still have a shot: There are a few universal steps you may take to improve your chances no matter the loan type.
1. Build your credit report
Your personal and business credit scores play a role in your lender’s decision. These scores show lenders how responsible you are with their finances and how likely you are to repay the loan. Your personal score, typically the FICO score, can range from 300 to 850. Your business score, the FICO SBSS score, can range from 0 to 300. The higher your scores, the better you look to lenders.
However, credit scores aren’t the only factor that lenders consider. While a high score can certainly make things easier, when issuing small business loans, lenders also consider the company’s cash flow, consistency, and revenue trends.
Strong, reliable cash flow shows that the business can comfortably handle regular debt payments without disrupting operations. Lenders also look for consistency in revenue, favoring businesses that demonstrate steady or predictable income over time rather than sharp fluctuations. Positive revenue trends signal stability and growth potential, which reduces perceived risk for the lender. Together, these factors help paint a more complete picture of a business’s financial health beyond what a credit score alone can show.
2. Research what the lender expects from you
Not every lender is right for every business, and qualifying for a loan is often about finding the best match for your stage, goals, and financial profile. While lenders do have baseline requirements, those expectations vary widely depending on the type of financing. Factors like the length of time in business, revenue consistency, ownership structure, and collateral all influence which options make the most sense for you. Understanding these differences early helps you focus on lenders aligned with your situation instead of applying broadly and risking unnecessary rejections.
More established financing options, such as SBA loans, tend to favor businesses with stronger fundamentals. These lenders often look for solid personal and business credit, multiple years of operating history, and reliable revenue. That does not mean you must be perfect across every category. Many lenders weigh the full picture, so strength in cash flow or experience can sometimes offset weaknesses elsewhere. The key is knowing which lenders value the areas where your business is strongest.
Consider the trade-offs that come with the options. For instance, some lenders can fund your loan faster than others but may not offer as much flexibility as a lender that takes a little longer. You’ll have to prioritize what features matter the most to you for the season that your business is in at the time.
Ultimately, researching lender expectations is less about forcing your business to fit rigid criteria and more about choosing financing that supports your goals. Loans with better rates, longer terms, and larger amounts usually require stronger financials and more documentation. When you understand how lenders evaluate risk, you can pursue options that align with where your business is today and where you want it to go next.
3. Gather necessary documentation
Since traditional lenders have stringent vetting procedures, they often require a large amount of paperwork to approve your application. If you want an answer as quickly as possible, it’s essential to gather all the correct documents ahead of time. Typically, qualifying for a loan requires:
- Bank statements and credit reports. Bank statements allow a lender to look at how your business managed its finances within a recent period. Similarly, lenders will typically ask for a credit report to see how well you and your business have managed your bills and debts.
- Income statement. An income statement is one of the three main documents that help lenders understand your business’s financial performance. It reports your revenues and expenses over a certain period. It also indicates your net profit or loss during that period.
- Balance sheet. The second of the three key documents for analyzing business finances, your balance sheet is a snapshot of a point in time. It summarizes all your assets, liabilities, and shareholder equity alongside your business’s net worth.
- Cash flow statement. Your cash flow statement is the last of the three key documents. It tracks how cash and cash equivalents flow through the business. Lenders can use it to see how well you earn revenue to repay your debts.
Many lenders have shifted toward digital-first lending models that streamline the application and review process. Instead of requiring borrowers to manually gather and upload documents, lenders often use secure connections to bank accounts and accounting software. These tools allow lenders to review financial activity directly, which can speed up decision-making and reduce back-and-forth requests for paperwork. For business owners, this approach can make the application process feel more efficient and less time-consuming.
That said, digital access does not eliminate the need for clean, accurate financial records. Lenders still evaluate cash flow, revenue consistency, and overall financial health regardless of how the data is delivered. Secure integrations simply make it easier for lenders to verify information and gain a clearer picture of how a business operates. Businesses that keep their banking and accounting systems well-organized are often better positioned to take advantage of these digital lending tools.
4. Write a great business plan
Some lenders want to understand how you plan to use the loan proceeds and how the funds will support repayment, but that does not always mean you need a formal, multi-section business plan. In many cases, especially for established businesses, clear financial statements and a straightforward explanation of how the funds will be used are sufficient. What matters most is that your request makes sense, aligns with your business operations, and demonstrates a realistic, tangible path to repayment.
A full business plan is typically more relevant for newer businesses, major expansions, or situations where the lender needs deeper context around the business model. Even then, lenders are usually looking for clarity, not length. A concise overview of what your business does, how it generates revenue, who owns and operates it, and how the loan will support specific goals can often accomplish more than an overly detailed document. Confidence comes from clear thinking and realistic assumptions, not from checking every box in a traditional template.
Unlike some other lenders, SmartBiz® Bank does not require a business plan for loan applications. Instead, we focus on financial performance, cash flow, and a clear use of funds. For many borrowers, this makes the application process more approachable and allows them to focus on presenting accurate financials and a well-defined funding purpose rather than preparing extensive written documentation.
5. Put up collateral
Many lenders will require collateral. This way, they can seize and sell your property to recoup their money if you can’t repay it. Your collateral can be any piece of equipment, inventory, or real estate with a value equal to or greater than your loan amount.
Some lenders avoid collateral in favor of a personal guarantee. This clause in your loan contract allows the lender to seize any of your personal assets, whereas collateral limits the lender to certain assets. Other lenders don’t require collateral at all – the typical credentials are all they need to determine your eligibility.
Consider whether you want to risk losing your assets before you agree to put anything up for potential seizure. If you’re confident you can repay your loan, the risk may be worth it to get yourself access to the highest-quality loans available.
Find out whether you pre-qualify for a small business loan
Small business owners and aspiring entrepreneurs may find themselves bouncing from lender to lender to find one that will approve them for a loan. While prior research and good preparation can help, the journey might still be a guessing game – unless you quickly check whether you pre-qualify.
As a small business owner, time is your most valuable resource. That’s why SmartBiz makes it easy to see if you pre-qualify in just minutes. Even if you’re not in a position to get a loan immediately, you can get a better idea of what needs to be improved so you can get the funds you need.
