How does a small business loan work?

The most common type of small business loan is a term loan, where a lender gives you a lump sum that you pay back plus interest and fees. However, there are plenty of other small business loans that could better fit your business's needs, so be sure to compare your options before signing for a loan.

Can I get a small business loan without collateral?

Yes. While many business lenders ask for a lien on your business assets as collateral—especially those with more lenient credit requirements—it's possible to find an unsecured business loan. Collateral isn't necessarily bad, however. You can often get lower rates when your loan is secured, since it's less risky for the lender.

Can I get a loan to start a business?

Getting a business loan to start a business can be difficult, and it's not always a good idea. New businesses are extremely risky: If you can't pay back your loan, which is a high possibility, it could ruin your personal finances. That doesn't mean you can't get financing to launch your new business through other means. Sources like angel investors, venture capitalists and crowdfunding platforms might be better, less risky places to start.

How long does it take to get a business loan?

The short answer: It depends on the type of loan you want and the lender you ultimately decide on. Online lenders can get you funding as quickly as the next business day, while bank loans typically take at least a couple of weeks.

What types of documents do I need to get a business loan?

It can vary, but generally lenders will ask for the following documents: A personal bank statement A business bank statement Your business's most recent tax return A business plan including financial projections Your business's license and information If you apply through a bank, your business might ask for many more documents, including a schedule of your business's debts, proof of collateral and even your personal resume.