Business financing comes in many shapes, and each lender sets its own requirements. Knowing what lenders typically review, and how to compare what they offer, can help you approach the process with realistic expectations.
What lenders commonly consider
- Time in business: many lenders look for a track record, and newer businesses may see fewer options.
- Revenue and cash flow: lenders want to see that the business can support a new payment.
- Use of funds: equipment, inventory, payroll or expansion can each point to different products.
- Credit history: both the business's and, often, the owner's. Our guide on how credit scores affect the offers you see covers the basics.
- Collateral or a personal guarantee: some lenders ask the owner to personally back the debt.
Common types of financing
A term loan pays a lump sum repaid on a fixed schedule. A line of credit lets you draw funds as needed. Equipment financing is often secured by the equipment itself. Some short-term products are priced with a factor rate instead of an APR, which can make them harder to compare.
Compare the full cost
Look past the payment amount. Compare APR where it's provided, all fees, the term and how often payments are due — daily or weekly payments can strain cash flow. Our guide on comparing offers by APR, fees and term explains why APR is a useful common yardstick.
Lendara is a marketplace, not a lender. Participating lenders make their own credit decisions and set their own rates and terms, which vary and aren't guaranteed. When you're ready, you can explore small business loan options from participating lenders.
See what offers may be available to you
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