What should you decide before contacting a lender?

Prepare a specific request: what you want to buy, what it costs and how much funding you need. Separate essential spending from purchases you could postpone. Attach supplier quotes where you have them.

Write a purchase brief

Hypothetical example: a small printing shop wants another machine. Its owner should list the machine, installation and any planned preparation work separately. Ask the supplier to clarify what the quoted price includes before choosing a borrowing amount.

For your own brief, answer four questions: Which customer work would this purchase support? What evidence do you have of that demand? When would the purchase become usable? What would you do if demand arrived later than expected?

Test the repayment before the purchase

Cash flow means money entering and leaving the business. Build a calendar using expected payment dates, then place rent, wages, suppliers and existing debt payments beside them. Use the small business cash flow guide to organize that exercise.

Prepare an ordinary month and a weaker month. Treat unconfirmed sales as assumptions and label them clearly. My recommendation is to leave room for a weaker month rather than using every available dollar to justify a larger request.

How do you qualify for a small business loan?

Get the requirements for the actual product before assembling a full application. The SBA explains that lenders and programs have different eligibility requirements. Its general guidance includes repayment ability and a sound business purpose. SBA loan requirements.

Separate eligibility from your own affordability check

Creditworthiness means an assessment of your ability and reliability in repaying debt. The SBA 7(a) page identifies credit history and reasonable repayment ability among its considerations. Prepare a clear account of existing borrowing and where repayments would come from. 7(a) eligibility factors.

• Ask whether your location, ownership and business activity fit the product.
• Request any minimum trading-history requirement.
• Ask which business and owner credit information will be reviewed.
• Check whether security or an owner guarantee is required.
• Ask how existing debts should be disclosed.

If a lender requests collateral, ask which assets would secure the borrowing. If it requests a personal guarantee, have it explain the owner's obligations if the business cannot pay. Read the relevant terms before agreeing to either.

For a new venture, separate completed sales from forecasts. If you cannot yet explain how repayments would be funded, consider reducing the project or exploring how to find business investors as a separate decision.

Which documents should you prepare?

Use the lender's checklist as the final authority. For SBA 7(a), application contents depend on the loan amount and the lender's processing method; the lender identifies the documents needed for your circumstances. SBA application guidance.

The folders below are a preparation aid, not a universal list of mandatory documents. Confirm the periods, formats and signatures needed before paying anyone to prepare additional reports.

Make the numbers explainable

Check differences between your sales records and bank deposits. Label owner contributions separately from customer receipts. Where an invoice remains unpaid, show that status instead of treating it as money already available.

If the reports are unfamiliar, work through how to read financial statements before the meeting. Write a short explanation for unusual entries, and ask your bookkeeper to review anything you cannot reconcile.

Keep a missing-document list with an owner and next action for each item. Name files clearly and show the reporting period. Use the same figures throughout the application, updating every affected document when you correct an error.

Which SBA loan types should you understand?

Begin with your funding purpose, then ask a participating lender about program fit. SBA lists 7(a), 504 and microloans as distinct options. Its overview describes 504 as long-term, fixed-rate financing through Certified Development Companies. SBA program overview.

What a 7(a) loan does

SBA 7(a) provides a guarantee to lenders. Permitted purposes include working capital, equipment purchases and refinancing current business debt. Working capital means money used to support everyday operations. Applications go through lenders rather than directly to SBA. 7(a) purposes and application route.

Check the full eligibility list with the lender. The business must operate for profit, meet SBA size requirements and satisfy other conditions, including the program's requirement concerning access to reasonable credit from other sources. Full 7(a) eligibility outline.

Where a microloan belongs in your search

SBA microloans are loans of $50,000 or less delivered by intermediary lenders. The overview presents them as funding for small improvements. Ask the intermediary whether your specific planned expenditure is permitted. SBA microloan overview.

Hypothetical example: a repair workshop wants one additional workstation. Prepare that purchase as a contained project, and ask about financing only the gap you identified. Keep possible future expansion outside the request until you have separately justified it.

How should you compare interest rates and total cost?

Request the repayment schedule and all required charges alongside the interest rate. SBA says its guaranteed loans generally have rates and fees comparable to loans without its guarantee. That statement does not establish the price of your offer. SBA rates and fees guidance.

Use one comparison sheet

• Amount borrowed and cash actually received.
• Repayment dates and scheduled payment amounts.
• Fixed or variable interest rate.
• Required fees and other charges.
• Early repayment and late payment terms.
• Collateral and personal guarantee obligations.
• Total scheduled payments under the quoted assumptions.

A fixed rate stays constant; a variable rate can change under the agreement. SBA notes that payments on variable-rate 7(a) loans may change when the rate changes. Ask the lender to illustrate how a rate increase would affect your payment. 7(a) repayment explanation.

Compare offers using the same amount and term wherever possible. If a quote has different assumptions, request an adjusted version. Mark unanswered questions clearly rather than treating a blank fee field as confirmation that no fee applies.

Before committing, review how to cut business costs and revisit the funding gap. Ask whether postponing one purchase would make the repayment plan more comfortable. Keep that decision separate from the maximum amount offered.

What should your application plan look like this week?

Aim to finish the week with a coherent borrowing request and a list of unresolved lender questions. Treat this as your preparation schedule, not a promise about approval time.

1. Define: write the purpose, amount and planned purchase date.
2. Prepare: collect records and build ordinary and weaker-month forecasts.
3. Check: ask lenders about eligibility, documentation and review stages.
4. Compare: request written offers using the same assumptions.
5. Resolve: clarify costs and obligations before signing anything.

Send a useful opening request

Try this: “I am seeking funding for a specific equipment purchase. I have supplier quotes, financial records and a repayment forecast. Please confirm suitable products, the required documents and what information you need to provide a complete cost illustration.”

If organizing the account records is still outstanding, use the business bank account guide as a preparation checklist. Assign one person to maintain the application folder and record every request from the lender.

If the application is declined, ask for the reason and whether anything can be corrected or clarified. Distinguish missing evidence from a product that does not fit. Choose the next step only after you understand that difference.