Signing Loan

The Ultimate Guide to Applying for a Business Loan

Learn more about what steps to take to apply for a business loan.

Does your business need an infusion of cash to help it grow? A business loan can provide you with the resources your business needs and offer an affordable payback plan. 

Here’s all you need to know about applying for a business loan: 

1. Check your credit 

Before you apply, check your personal and business credit health. 

Personal credit scores range from 300-850. A score that falls in a range of 580-669 is fair, 670-739 is good, 740-799 is very good and 800-850 is exceptional. 

Business credit scores are measured differently. Experian uses Intelliscore Plus as its credit scoring model, with scores ranging from 1 to 100. Equifax assigns each business a payment index score, which ranges from 0 to 100; a credit risk score ranging from 100 to 992 and a business failure score ranging from 1,000 to 1,880. The D&B score, assigned by the Dun & Bradstreet Corporation ranges from 0 to 100. Finally, the FICO Small Business Scoring Service score ranges from 0 to 300. 

If your personal and/or business credit scores are low, work on improving your credit before applying for a loan. 

2. Update your business plan 

Be sure to have a comprehensive business plan to show a prospective lender. The plan should include details about how the company intends to use the funds, the anticipated increase in revenue and plans for repaying the loan. 

3. Consider arranging supplemental collateral 

Lenders prefer to reduce the risk of a borrower defaulting on a loan by securing collateral for the loan. For business loans, this usually takes the form of the company’s accounts receivable, equipment or other assets. 

When applying for a business loan, you can offer additional collateral to the lender, such as personal assets like real estate. This will make you more likely to qualify for the loan and may bring down the interest rate on your loan. 

4. Organize your personal and business documents 

You’ll need the following documents and identifying paperwork to apply for a business loan: 

∙ Photo ID 

∙ Accurate monthly financial statements from the past two years 

∙ Business license

∙ Any commercial leases 

∙ Business insurance plans 

∙ Payroll records 

∙ Incorporation documents 

∙ Current financial obligations 

∙ 3 months of bank statements 

∙ Personal and business tax returns 

∙ Collateral 

5. Research potential lenders 

It’s best to take some time researching potential lenders before applying for a loan. Learn about each lender’s eligibility criteria and the average interest rates on their loans.  

Consider applying for a business loan through a credit union. A credit union will offer you personalized service and a competitive interest rate. Learn more about Listerhill's business lending opportunities here

6. Submit your application 

You’re ready to apply for a loan! With luck, you’ll soon have the funds you need to take your business to the next level. 

Want to learn more about the products you need for managing and tracking business expenses? Click here

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Frequently Asked Questions

  • What can home equity loans be used for?

    Home equity loans provide you with the opportunity to chase dreams to the fullest. Enjoy a vacation with the whole family, invest in a household remodeling project, or even finance an upcoming vehicle purchase with only a few clicks.  If you can dream it, you can achieve it!

  • What type of requirements exist for home equity loans?

    Home equity loans rely on a loan to value ratio (LTV) to disburse funds, meaning that your credit score and home equity value should be fairly substantial to take advantage of all possible benefits. For assistance in the home equity loan pre-approval process, please speak with your local Listerhill Credit Union branch.

  • How do home equity loans work?

    Also known as a second mortgage, home equity loans work by borrowing against the value of your home’s current equity. You may calculate this yourself by subtracting the amount you owe on your mortgage from the value of your home. Home equity loans provide lump-sum funds at fixed rates, creating affordable monthly payments that are consistent and affordable.

  • What information should I know before securing a land loan?

    When you purchase land, you want to ensure that it can be used for the desired purpose. That involves having certain information about the land in advance, such as the items listed below:

    • Land survey to know the boundaries of the property
    • Property easements so you know who has permission to enter or use your land for sewer pipes or cable wires
    • Title search to see what easements are on your land
    • Zoning laws to determine whether the land is zoned for residential use, commercial use, or another option
    • Flood hazard risk, so you’re aware of any extreme weather risks
    • Appraisal so you know the value of the land compared to similar options 
  • When does it make sense to refinance a mortgage?

    Refinancing your home loan can be a great option to secure a better loan for your current circumstances and future goals. It makes sense to refinance your mortgage if one of the benefits will be helpful for you:

    • Secure a lower interest rate
    • Reduce your mortgage term
    • Switch from an adjustable-rate mortgage to a fixed-rate mortgage or vice versa
    • Borrow against the equity in your home


    If doing any of the above would benefit you, refinancing might be the next best move.