Tell Me More: Small Business Lending

Small business lending can provide funds for initial expenses, financing ongoing operations, or major investments in equipment for startups or companies with less than 100 employees. If you have a sufficient credit rating, a bank or lender can work out a payment schedule for the money borrowed plus interest. You may have to prove you can pay the money back, either by putting up collateral, or by submitting regular financial reports of your business to prove you can pay the loan back.

The first place to apply for small business lending should be the bank that already handles your finances. With your current bank, you've established a relationship and shown that you're a reputable business. You may also be able to get better rates for commercial loans. However, your small business may have a few more hurdles to overcome: banks may require more collateral and they could deny you the loan if you’ve only conducted business for five years or less.

If the bank rejects your application, a broker might be your next option to secure small business lending. While they don’t loan you the money directly, they can perform a thorough review of your finances and determine which lenders could potentially accept your application.

Brokers are particularly helpful to startup companies or high risk businesses trying to get off the ground. Also, with their large network of clients, they might be able to get you approved where other lending institutions would deny you. Brokers need to collect a higher fee for their services to markup the loan from the provider and as compensation for taking the greater risks.