Taking out a small business loan can jumpstart your brand new company or give you the funds to maintain or even grow your business to the next level. Either way, it can feel like you're heading into uncharted waters. But, putting aside your fears can have a huge pay-off. According to Fundera, the average SBA loan amount is $107,000 and the average small business bank loan amount is $633,000.
Don't let your intimidation of getting a small business loan cost you massive funding. Getting a small business loan isn't that scary when you have all of the facts at your disposal.
1.Determine Why You Want A Business Loan
MStudioImages/Getty Images
The first step to take when thinking about acquiring a small business loan, is figuring out why you want one in the first place. It's key to know why you need a business loan for multiple reasons. How are you going to know which type of loan and lender can fulfill your needs? A few reasons to apply for a small business loan include:
- Starting a new business
- Growing your business
- Financing equipment or vehicle purchases
- Day-to-day expenses
- Buying another business
- Build your business credit history
2.Pre-assess Your Qualifications For A Loan
Before wasting your time applying for loans that are out of your reach, assess your current qualifications for a loan. This will help you to determine which loan types and lenders will most likely approve your loan, narrowing your search.
How is your credit score looking?
Most people are familiar with a personal credit score, yet many aren't familiar with a business credit score. If your business is brand new, you'll lack a business credit history, so loan administrators will focus on your personal credit score.
If you're unsure about your personal credit score or business credit score, check your credit report using the three major credit bureaus: Equifax, Experian and TransUnion. If there's anything concerning your reports, it's important to resolve these issues to amplify your chance of loan approval.
Do you have the minimum annual revenue?
Most lenders care about your business's annual revenue because they want to ensure you can actually pay them back. Calculate your annual revenue to assess if you meet a lender's minimum annual revenue requirement. Each lender has unique qualifications, but if your annual revenue is at least $100,000, you should be good to go for most small business loans.
3.Determine The Type Of Loan
SDI Productions/Getty Images
There are many loan options for small business owners, but below are 4 options that are pretty common among small business borrowers.
- Term Loans:Term loans are one of the most popular type of loans for small businesses. Small business owners receive a lump sum of cash that is expected to be repaid over a fixed term, while accruing monthly interest on the principal balance. This loan type allows lendees to use their lump sum of cash on a diversity of needs, such as the purchasing of equipment or inventory expenses.
- Small Business Line of Credit: A small business line of credit is comparable to a credit card because borrowers receive a maximum credit limit that can usually be accessed through a checking account. Business owners who have no idea how much funding they may need will benefit from this option because you only withdraw what you need. Plus, you can repay your owed amount, and then withdraw money once again to keep your credit balance low. You're only charged interest for the amount you withdrew, instead of being charged for the entirety of the loan amount like a term loan.
- Small Business Administration Loan (SBA): SBA loans are a perfect match the owner who wants a government-backed loan. These loans entice business owners because of their low-cost, but the application process is known for being excessively long delaying the administration of funding. These loans are great for the business owner who prioritizes low-interest rates and fees over receiving their funds ASAP.
- Equipment Loans: Equipment loans are fitting for the borrower who needs to finance large equipment/machinery/vehicle purchases, but lack the capital to do so. These loans are for purchases that maintain their value, such as office furnishings or laptops. If you can't pay your loan back, your purchases can be held as collateral.
4.Choose Lenders After Comparing Your Options
Before choosing a random lender, shop around to find the best-fit lender. There are a couple of factors to consider. What are the lender's fees? Which lender offers the best APR? How fast will the loan be administered? How large of a loan do they typically offer borrowers with your background?
There are many factors to consider, including the type of lender:
- Banks match the borrower who's been in business for at least two years, has good credit, and the patience to wait for funds. There are several banks to choose from including: J.P.Morgan, Citibank, and Wells Fargo.
- Online lenders are fit the borrower who prioritizes fast funding over low APR rates and higher loan approval rates than a traditional bank. Check out a few of the online lenders that supply small business loans: OnDeck, UpStart, and Credibly.
- Microlenders are an excellent option for borrowers who have a less than stellar credit history, cant receive a traditional loan, or have a new business. A few popular microlenders: LiftFund, Opportunity Fund, and Justine Peterson.
5.Apply For Your Small Business Loan & Submit
xavierarnau/Getty Images
After choosing lenders, it's time to apply! Understanding the application process and requirements is key to approval. Once you understand the application requirements, gather the needed documents. Lenders may require a business plan, tax returns, credit reports, legal documentation, and the purpose of the loan.
After gathering your application documents and filing out the application forms, double check your application. All that's left to do is submit your materials, and wait for a decision. Good luck!
Hopefully after learning 5 steps to getting a business loan, the entire process seems a little less daunting. The only thing left to do is to use the advice and start sending out business loan applications. If you're rejected by a lender, that's OK because you can apply to other lenders or take some time to become a stronger applicant.
Featured image by xavierarnau/Getty Images
- Tina Fitch Hobnob Raised $2.25 Mill In Seed Funding - xoNecole ... ›
- Increase Boost Sales Small Business - xoNecole: Women's Interest ... ›
- Black Business Month Resources For Entrepreneurs ›
- Funding Resources For Black Women Entrepreneurs - xoNecole: Women's Interest, Love, Wellness, Beauty ›
RELATED
Pluto goes retrograde in Aquarius from May 4 until October 13, and this will be a time of remembering your power when it comes to your purpose, innovations, and the ability to attract support into your life. Mercury moves into Taurus on May 10, making this a good time for negotiations, creating new plans financially, and sticking to your word on something that holds value to you. The Full Moon of the month occurs in Scorpio on May 12, and this is the Flower Moon of the year, signifying growth and seeing the beauty in your life.
This Full Moon is all about letting go of what doesn’t feel authentic or resonate with you emotionally, and about experiencing more closure and healing within relationship matters.
Your May 2025: A Monthly Overview
Gemini Season officially begins on May 20, and we enter air sign energy, which is good for communication, business, and coming up with inspiring and new ideas. On May 24, Saturn enters Aries, beginning its new transit where it will remain for the next few years. Saturn in Aries is bold, direct, and straightforward, but so are its lessons. There is a gift in resilience and finding your strength during this time, and this transit will show you where your power is, but it may challenge you to confront self-limiting behavior in the process.
Mercury enters Gemini on May 25, and Mercury loves being here. Mercury in Gemini is the creative genius, and this is a month of aligning yourself with this energy. On May 26, we have a New Moon in Gemini, and it’s time to set your intentions for where you want a communication breakthrough in your life, and what new ideas you want to start planting the seeds for. This is a good New Moon for networking, exchanging ideas, having more fun, and getting inspired.
Article continues after the jump.
We Are/Getty ImagesMay 2025 Horoscopes for Every Zodiac Sign
Keep reading for your sun, moon, and rising sign below to see what May has in store for you.
ARIES
AriesKyra Jay for xoNecoleThe impact from April is finally behind you, and you get to move forward this month, Aries. After a month of retrogrades and Eclipses, you are starting to see the progress of what you have been working towards financially this year. The Sun is in your 2nd house of abundance, self-confidence, and values this month, and you are putting your dreams here first.
With Venus also in Aries for the entire month of May, you are feeling the support within and without this month, and this is a beautiful month unfolding.
On May 24, Saturn enters your sign, beginning its transit in Aries, which will last for the next few years. Saturn is the master of tough love, and you are going to be learning a lot about yourself during his time and going through a growth spurt. The New Moon of May is at the end of the month on May 26 and will be giving you the answers and clarity you have been looking for, highlighting open communication in your life. Overall, this is your month of fewer obstacles and more progress.
TAURUS
TaurusKyra Jay for xoNecoleTaurus Season is officially underway, and you are the main character right now, Taurus. Remember that. This month is about trusting your intuition and the timing of things, and knowing that things are working in your favor. With Venus, your ruling planet, in your 12th house for the month, you are seeking a lot of closure and culmination right now and are healing what was. Mercury enters your sign from May 10 until May 25, and it’s all about the perspectives you are gaining right now.
Don’t be afraid to ask the important questions and get down to the bottom of things that have been worrying you. On May 12, there is a Full Moon in your 7th house of partnership, and you are closing the door on what has not been working for you in love. You are seeing the clarity of what you need within your emotional world and how you want to navigate the changes you have been through here now.
GEMINI
GeminiKyra Jay for xoNecoleMay is a new beginning for you, Gemini. You have a lot of energy and vitality with you this month, and you are ready to accomplish some personal goals and intentions of yours. For most of the month, the Sun is in your house of closure and healing, and you are finding yourself rejuvenated from the transformations you have been through. Gemini Season officially begins on May 20, and with the Sun in your sign, nothing is holding you back from shining and living in your truth right now.
On May 25, Mercury enters Gemini until June 8, and Mercury loves being in your sign, as this is your planetary ruler.
Mercury in Gemini is forward-thinking, quick, and intelligent. You are coming up with solutions to previous challenges or obstacles, and overcoming something that has felt restrictive mentally. Before the month ends, there is a New Moon in Gemini on May 26, and this New Moon is one of the best times of the year for you to set your intentions and manifest your dreams. Remember you are worthy of what you are setting out to accomplish this month, Gemini.
CANCER
CancerKyra Jay for xoNecoleCancer, this month requires you to slow down, take care of your health, and allow things to come to fruition the way they are meant to. There is a chance you could be overthinking more than usual this month, and you are being reminded that there is only so much that is in your control, and to give yourself some more grace. The Full Moon in Scorpio on May 12 will help you gain a little more clarity of the heart and is going to be a time of feeling the love and appreciation in your life.
Saturn enters your 10th house of career on May 24, remaining here over the next few years, and you are getting an opportunity to grow and discover where you may have been limiting yourself professionally, socially, or within your aspirations in life. This time is all about reminding yourself that you deserve recognition for the work you do, but that you must also be the one believing in yourself as well. On May 12, there is a New Moon in your house of emotional healing, and you are seeing the gifts of alone time, safe spaces, and tending to your creative inklings at the end of the month.
LEO
LeoKyra Jay for xoNecoleThis month is an opportunity for a new beginning in love and progress within your emotional world, Leo. You are learning to trust your intuition more, and you are putting more of your energy into your heart’s desires. With the Sun in your 10th house for most of the month, you are shining in your truth and remaining confident in your goals in life.
Venus is in your house of adventure for the entire month, and this is a good time for experiencing romance while traveling or getting out of your comfort zone a little.
Saturn makes a significant move from Pisces into Aries at the end of the month and enters your 9th house. With Saturn here, you will be learning more about what mental growth and clarity mean to you, and this is a good time to dedicate yourself to higher education, traveling, gaining a new perspective, and honoring your integrity and values. The New Moon of the month is on May 26, creating magic within your friendships and community.
You are leaving this month with hope in your heart and new plans for the future.
VIRGO
VirgoKyra Jay for xoNecoleMay is a month of abundance and fruition for you, Virgo. Your dreams and intentions are coming to fruition, and you are owning that which you have created for yourself. With Venus in Aries, this is a good time for seeing support in your life financially, dedicating yourself to your commitments and responsibilities, and seeing the gifts in that. On May 12, there is a Full Moon in your 3rd house of communication, and this is an intuitive time for you, giving you the strength needed to close the chapter on what you don’t resonate with anymore.
On May 24, Saturn enters your house of shared finances, rebirth, intimacy, and resources, and over the next few years, you will be learning the importance of connecting with people who truly have your best interest at heart, and not committing to what feels unstable. Before the month ends, we have a New Moon in Gemini in your house of career, and this is a good time to manifest and set your intentions for where you want to see professional growth in your life.
Overall, May is about embracing your freedom while honoring the people and connections that help you grow and make you feel more secure in life.
LIBRA
LibraKyra Jay for xoNecoleThis is a month of feeling empowered and ready to take on anything that comes your way, Libra. You are inspired by the progress you are making in your life right now, and with Venus in your 7th house of love, you are being well-received. This is a month of finding your balance between your path and the growth of your relationships, and there is a sense of support, harmony, and love in your life in May.
You are owning your authenticity and living in your truth fully, and this energy is magnetic.
However, Saturn also enters your 7th house of love this month, where it will remain for the next few years. Saturn empowers and helps you grow, but you can also feel a little more challenged within your relationships during this time. The more you can own your wants and needs, the more you can find vulnerability and support within your relationships. On May 26, a New Moon in a fellow air sign occurs and happens in your 9th house, creating a chance at a new adventure and an opportunity to discover some new inspiration.
SCORPIO
ScorpioKyra Jay for xoNecoleMay is about believing in the impossible, Scorpio. It’s time to take a leap of faith in yourself and to remember your power. You are seeking a new beginning in your life, and with the Sun in your 7th house of love for most of the month, you are being supported and encouraged in the process. Pluto, one of your ruling planets, goes retrograde in your house of home and family from May 4 until October, and you are gaining clarity on the people and support systems you can rely on more.
The Full Moon of the month is in your sign on May 12, and this is the Flower Moon of the year. You are in full bloom and ready for whatever is next for you, and this is beautiful. Previous intentions and goals come to fruition for you overall in mid-May, and there is a lot to look forward to right now as you are getting excited about it all. Before the month ends, we have a New Moon in Gemini in your 8th house, creating a sense of empowerment through what you are looking to change and transform in your life right now.
This month is about not being afraid to take more risks and doing things your own way.
SAGITTARIUS
SagittariusKyra Jay for xoNecoleMay is a beautiful month of magic, success, and good fortune, Sagittarius. You are feeling lucky this month and are attracting success to you in many different areas of your life. Venus, the planet of love, is in your 5th house of romance for most of the month, and you are enjoying your life, feeling the love within your heart, and expressing yourself freely in May. You are a magnet for your manifestations, and dreams are coming true for you this month, Sag.
On May 12, we have a Full Moon happening in your house of endings and closure, and you are closing out a big chapter in your life this month.
You are letting go of old pain or emotional experiences and choosing not to repeat a pattern that left you feeling hopeless before. On May 26, we have a New Moon in your sister sign, Gemini, enhancing your need for love, connection, and relationship development this month. This is a great New Moon to set your intentions for what partnerships you want to see grow, heal, and come to fruition for you. Overall, May is your month of fruition, balance, and believing in the magic in your life.
CAPRICORN
CapricornKyra Jay for xoNecoleMay is about slowing down and allowing yourself to find the answers you have been looking for, Capricorn. This isn’t the time to rush your progress or doubt where you are in life. The Sun is in your 5th house, and this is good for finding more time for fun, pleasure, self-care, and asking your heart what it needs. With Pluto going retrograde in your 2nd house of values and income, you are being reminded to hold yourself with integrity and to know that you are worthy of the things you are asking for.
The Full Moon on May 12 is a beautiful time to connect with loved ones or those who inspire you. The universe wants to show you that you are not alone this month and that you deserve to live a life where you can enjoy yourself more and manifest your dreams, rather than believing everything needs to be a challenge to be worthy. Saturn, your ruling planet, then enters your 4th house of home and family, and over the next few years, you are going to be rediscovering what home means to you.
AQUARIUS
AquariusKyra Jay for xoNecoleYour guidance for May is to trust that what is falling from your life or changing for you is doing so for your benefit, Aquarius. Trust that what is happening is happening for you and not to you, and don’t doubt that you will rebuild from this. With Pluto going retrograde in your sign from May 4 until October 13, you need a break from some of the confusion you have been feeling in your personal life, and you are getting a chance to gain a new perspective this month.
Use this time to get inspired by change rather than let it bring you down, and ground yourself in the present moment more.
Saturn enters Aries in May, where it will remain for the next few years, helping you grow in the areas of your life that have to do with communication, networking, transportation, siblings, and education. You will be learning a lot during this time and will be finding new outlets for self-expression and communication. Before the month ends, we have a New Moon in Gemini occurring in your 5th house of romance, pleasure, hobbies, and entertainment, and after a month of navigating endings, changes, and closures, you are ready for a fresh start and are receiving one in love now.
PISCES
PiscesKyra Jay for xoNecoleAllow what is to be, be, Pisces. May is a month of allowing yourself to trust the timing of the universe and not giving up hope that things are going to turn out beautifully for you. On May 12, there is a Full Moon in fellow water sign, Scorpio, and this is a time to get inspired and see the benefits of closure. This Full Moon is about gaining a new perspective and not doubting what is clearer to you now, that you are worthy of a new beginning.
On May 24, Saturn moves into your 2nd house of income, and you are going to be moving through a journey of developing financially, and working on maintaining stability while building new foundations in your life. The New Moon in Gemini at the end of the month is about setting your intentions for your home and family life and creating some new energy here. Overall, May is your month of breaking ground on the things you want to create for yourself and trusting the timing of how things are unfolding.
Let’s make things inbox official! Sign up for the xoNecole newsletter for love, wellness, career, and exclusive content delivered straight to your inbox.
Featured image by Kyra Jay for xoNecole
