Loans are usually taken out by small-business owners, partners, the C-suite or a president. Depending on your business’s governance structure, some or all of these players will need to be involved in the process.

The decision to apply for a loan is ultimately a business one. Loans can help to grow your business, protect your bottom line and benefit your employees.  

In order to submit the most acceptable application, consider the following factors.

Choose your lender

Your first question, understandably, might be: “Who should I turn to for a loan?” While your day-to-day bank may be your first thought, remember that you don’t need to have an existing relationship with a lending institution to apply for a new loan.

You might have a need for a one-off term loan—such as a term loan for equipment—and want to go with a bank that’s different from your primary bank. Maybe you want to use a loan as a way to try out a new bank before moving all your operating accounts over or refinancing your loans. Maybe another bank is promoting better terms.

Remember that starting a loan application with a new bank may take longer since you don’t have an existing relationship or a relationship manager who knows the details of your business history.

Review your potential collateral

Are you ready to provide collateral for a secured loan if needed?

  • What is collateral? Collateral could be equity or real assets, and if you are unable to pay back the loan, they may need to be turned over to the lender. Any assets that you use as collateral will be tied up with the loan.
  • Who needs to provide it? Not all loans require collateral, but for those that do, banks might require anyone with a significant ownership percentage in the business to provide it. That might mean silent partners have to pledge some assets in order to share the risk.

The value of your collateral will be set by your lending institution.

Consider your credit worthiness

Before you apply for a small-business loan, consider how it could impact your future personal and business credit scores.

As a part of the process of applying, your lender will likely make inquiries to major credit bureaus that record personal and business credit scores. Those inquiries will appear on your credit report for years to come.

Before applying, you might work with a relationship manager at the lender to head off any issues and make your business more marketable for the loan.


The goal for any underwriter is to determine whether your business can service the debt that you are looking to take on. They will likely start that review by looking at key information about you and your business, including:

  • Credit scores.
  • Prior bankruptcies.
  • Delinquent payments on past debts.
  • Your financial standing and capabilities, including any savings.
  • Potential collateral, if the loan needs to be secured.

For more complex loans, they may ask for more detailed reports and documentation about your business, including:

  • Cash flow.
  • Historical tax returns.
  • Revenue reports.
  • Day-to-day expenses.
  • Projections.

The lender will assess the financial status of your business, which can take time, so build the underwriting process into your timetable.

SBA approvals may take a bit longer

For loans that have a guaranty from the U.S. Small Business Association, or SBA, there will be additional steps. After credit approval is received from underwriting, you will need to fulfill the SBA’s loan application requirements.

At high-touch institutions, such as M&T bank, a specialist in SBA lending will provide you with the SBA requirements needed to complete the process.

When it’s time to sign

What happens when it’s time to sign a loan agreement? The financial industry is working toward an all-digital future, but it’s not there yet. Some documents still require a signature on paper, but some do allow e-signatures, like DocuSign.

What happens if my loan application isn’t accepted?

Work with your lending institution ahead of time to avoid this, as they may be able to make your business more marketable to the underwriters before you complete your application.

  • If you have credit issues: Work to improve your score and make yourself more creditworthy before reapplying.
  • If you lack collateral: Could you secure additional funding or investors to help? Outside parties can help with a down payment for a loan or by investing equity directly into your company.
  • If you asked for a high sum: Consider a lower loan amount. What goals or needs could you delay until your business is more established or successful?

Consider a high-touch model

Working with a lending institution that offers a higher-touch model with relationship managers can smooth the loan application process. Especially if the institution already understands your industry, your business and your history.

Ready to get started?

Thanks for reading our guide on small-business lending. We hope that the information has made you more comfortable with the lending options that are available to your business and the process for applying. We look forward to hearing from you and discussing how M&T Bank can build a lending solution that will fit with the needs of your business.

This content is for informational purposes only. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. Please consult with the professionals of your choice to discuss your situation.