How to Get Loans for a New Business

Starting a new business often requires significant capital, and securing a loan can be crucial for getting your venture off the ground. While obtaining financing for a new business can be challenging, there are several strategies and options available to entrepreneurs in 2025. Here’s a comprehensive guide on how to get loans for your new business:

Understand the Types of Loans Available

1. SBA Loans: The Small Business Administration offers various loan programs, including:

   • 7(a) loans for general business purposes

   • Microloans for smaller amounts up to $50,000

   • CDC/504 loans for major fixed assets like equipment or real estate

2. Traditional Bank Loans: These can be harder to obtain for new businesses but offer competitive rates if you qualify.

3. Online Lenders: Often have more flexible requirements but may charge higher interest rates.

4. Business Credit Cards: Can provide quick access to funds for short-term needs.

Prepare Your Business Plan

A solid business plan is essential for loan applications. Include:

• Detailed financial projections

• Market analysis

• Your business model and strategy

• Information about your management team

Boost Your Personal Credit Score

For new businesses, lenders often rely heavily on the owner’s personal credit. Aim for a score of at least 670, though 690 or higher is preferable for better terms13.

Gather Necessary Documentation

Be prepared to provide:

• Personal and business tax returns

• Bank statements

• Financial statements (if available)

• Business licenses and registrations

• Proof of collateral (if applicable)

Consider Offering Collateral

Many lenders require collateral for new business loans. This can include:

• Business equipment

• Real estate

• Inventory

• Personal assets

Explore SBA Loan Programs

SBA loans are often more accessible for new businesses. Key requirements include2:

• Operating within the U.S. or its territories

• Being a for-profit business

• Having invested your own time or money into the business

• Exhausting other financing options first

Look into Alternative Financing Options

Consider:

• Crowdfunding platforms

• Angel investors

• Venture capital (for high-growth startups)

• Friends and family loans (with clear terms)

Demonstrate Your Commitment

Show lenders you’re invested in your business by:

• Making a significant personal investment

• Having skin in the game (e.g., using personal savings)

• Showing a strong commitment to the business’s success

Build Relationships with Lenders

Start building relationships with local banks or credit unions early. Even if you’re not ready for a loan, establishing a connection can be beneficial for future financing needs.

Seek Expert Advice

Consider working with:

• SCORE mentors (free business mentoring)

• Small Business Development Centers

• Financial advisors specializing in small business financing

Be Realistic About Loan Amounts

Request only what you need and can realistically repay. Lenders appreciate borrowers who have carefully considered their financial needs and repayment ability.

Improve Your Chances of Approval

• Have a clear purpose for the loan funds

• Show how the loan will help grow your business

• Be prepared to explain how you’ll repay the loan

• Have a backup plan for repayment if your business struggles

Consider Starting Small

If you’re having trouble securing a large loan, consider starting with a smaller amount to build your business credit and prove your ability to manage debt.

Remember, securing a loan for a new business can be challenging, but with thorough preparation, a solid business plan, and persistence, it’s possible to find the financing you need to launch and grow your venture in 2025.