Need Money? How to Look for a Small Business Loan

Finding a loan to finance a new or fledgling business is especially difficult in today’s economic environment. But lenders are providing funds to many small business owners.

The best place to start

When deciding which lenders to approach, business owners should first go to financial institutions where they already have a business relationship (for example, a home mortgage, auto loan, or savings account) and institutions that make loans guaranteed by the U.S. Small Business Administration (SBA).

If you don’t need the money right away, take the time to build your relationship with your bank’s management.

There are several places to look

The most common types of lending institutions are commercial banks, local community banks, and speciality lenders for small loans.

Commercial banks (for example,  Synovus and SunTrust) typically operate on a national or regional scale, focus on larger loans, and have the most stringent lending criteria.

Community banks (such as Cornerstone Bank or Community Bank of Manatee) confine their lending to a local market such as the Tampa Bay area. They are more likely than national and regional banks to be receptive to small enterprises looking for small and mid-size loans.

Specialty lenders (including Superior Financial Group, ACCION, and TBBBIC) concentrate on small loans, typically up to about $35,000. They often have more relaxed lending criteria and some even process loan applications on line.

What are they looking for?

Every institution has its own lending criteria, but they normally expect several things from a borrower:

1. Have experience in the intended business. Opening a franchise that gives the new business owner training and ongoing support can be a substitute for direct

2. Have a sound business plan.

3. Have a personal credit score of 700 or more; for small loans, a score in the 600s
might be sufficient. (You can obtain a free credit score at

4. Contribute 25-35% of the total funds required in the form of an equity investment.
Specialty lenders sometimes require less for small loans.

5. Offer all personal assets (like your home, vehicle, stocks and bonds) as collateral to secure the loan.

6. Sign a personal loan guarantee.

Owners must also expect to furnish personal information including copies of recent income tax returns, a statement of net worth showing all assets and liabilities, proof of citizenship or legal residency in the U.S., and an affirmation that the owner has no prior criminal conviction and is not on parole, probation, or under indictment.

Need more info?

A SCORE counselor can help you determine if your business might qualify for a loan, identify potential lenders, and help you with the loan application process. Call the Pinellas County SCORE chapter at (727) 532-6800 or email

This post was written by Don Wheeler, a counselor at Pinellas County SCORE.