Whether you’re just starting out or you’re looking to expand your business, understanding how to get a $100k business loan can help you secure the capital you need to build your business the way you want. 

Obtaining that much financing can be challenging, especially if you’re a startup with no business credit history or financial track record. Here are five steps you can take to achieve your goal and get the funding you need.

Step 1: Establish Good Personal and Business Credit Scores

Your creditworthiness is a fundamental element of the underwriting process, and lenders may look at both your business and personal credit scores. 

If your business has been established in the last few years, they may look at your personal credit history more closely. But if you’ve taken the time to establish your business credit scores, those can also factor into your eligibility.

Credit scores provide lenders with a summary of how well you and your business have handled debt in the past. The higher they are, the better your chances of finding affordable financing options.

If you’re looking for an opportunity to build business credit, consider a business credit builder loan from CreditStrong. With small monthly payments of up to 120 months, you can establish a solid credit foundation for your business. 

The loan funds are held in a business savings account to secure the loan, and once you’ve finished making payments, you’ll receive the full amount. 

There’s no hard inquiry on your credit reports, and you just need to meet a few requirements:

• Have an employer identification number (EIN)
• Three months of operating history
• Be located and have a physical address in the US
• Be an LLC, Partnership, or Corporation

There are also many other companies that can help you establish business credit, so try a multi-prong approach to achieve your goal more quickly.  

Step 2: Find the Right Lender

Depending on the type of loan you’re looking to get, take some time to research lenders that offer it. If you’re just starting out, traditional business loans from banks and credit unions may not be accessible, and online lenders and nonprofit organizations may be your best bet.

But the longer you’ve been running your business, and the more established your business credit history is, the more options you’ll have.

Here are some potential options to consider:

• Direct lenders: Direct lenders are financial institutions that provide loans directly to small business owners. They’re the most common type of commercial lender and they encompass banks, credit unions, online lenders, and nonprofit organizations. Online lenders tend to offer easier approval, but you’ll pay for it with a higher interest rate. In contrast, banks and credit unions have more stringent requirements but can provide you with rock-bottom interest rates and favorable repayment terms.
• Peer-to-business lenders: Also known as P2B lenders, these are individual lenders or investors who are willing to lend money to small businesses from around the world in exchange for consistent payments with interest. There are many P2B platforms that can connect you with investors. These loans tend to have higher interest rates, but they can be easier to get, especially for new businesses.
• Lending marketplaces: Lending marketplaces work similarly to P2B platforms in that they don’t fund loans directly. However, they can help connect you with multiple lenders, which you can compare side by side to determine which is the best for you. Once you’ve determined which offer you want, you’ll be directed to the lender’s website where you can submit an application. Lending marketplaces can be worth considering for small business owners across the credit spectrum and can make it easier for you to find out which lenders you might qualify with based on a prequalification process.

In general, it’s best to research and compare lenders across these three categories to ensure you’re getting the best deal.

Step 3: Get Your Documents in Order

The documents you’ll need during the application process may depend on the type of business loan you’re looking to get. 

Here’s a quick list of some of the more common documents that you may need to provide when applying for a business loan: 

• Bank statements
• Tax returns
• Proof of business registration and license
• Other legal documents
• Employer identification number (EIN)
• Articles of incorporation
• Income statement
• Balance sheet
• Budget
• Cash flow projections

You should plan to gather these documents before you go through the application process so it goes more quickly. The longer you wait to put them together, the longer the loan will take to fund.

Before you apply with a specific lender, you may also want to search the company’s website to determine if there are other documents you’ll need. And if you’re applying for an SBA loan, check out the loan application checklist provided by the federal agency.

Step 4: Make Sure You’ve Got a Strong Business Plan

In many cases, you may also be required to provide a business plan, especially if you’re seeking to borrow $100,000 or more. 

Your business plan covers a lot of different things, including:

• Executive summary: Tell the story of your business, including what products or services you provide, your mission statement, and other basic information. Provide some high-level financial information and plans for using the funds.
• Company description: Go into more detail about your company, including the problems it solves and your competitive advantages. Talk about your customer base and how you plan to succeed.
• Market analysis: Provide some competitive research, showing the strengths and weaknesses of competitors and how they’re trying to solve the same problems.
• Organization and management: Provide the legal structure of your company and whether you have plans to change that in the future. You may also provide an organizational chart showing how the company will be managed.
• Service or product line: Provide a more detailed description of your products or services, including how they benefit your customers. You can also include information about your product’s life cycle, what type of research and development you’re engaging in, whether you have plans for copyrights or patents, and more.
• Marketing and sales: Explain your marketing and sales strategy from the top of the funnel to the bottom.
• Funding request: Share how much you’re hoping to borrow, as well as what you plan on doing with the funds and how that will help your business grow. Be as detailed as possible in order to show how serious you are.
• Financial projections: Depending on how long you’ve been in business, provide income statements, balance sheets, and cash flow statements for the last several years. Also include projections for the next five years. The goal is to show that your business is financially stable and will continue to be stable enough to make your loan payments.

Step 5: Provide Collateral or a Down Payment

Many small business lenders require that you provide a down payment or collateral on a loan. Down payments are more common with equipment loans, where you’re financing the purchase of heavy machinery, a vehicle, or other equipment.

Equipment loans will also use the equipment you’re buying as collateral. In the event that you default on the loan, the lender will seize the collateral and sell it to recoup the remaining loan balance.

With other loans, you likely won’t need to provide a down payment, but a collateral requirement is common. You can use any number of business assets, including real estate, equipment, inventory, vehicles, accounts receivable, cash, or securities. 

The important thing is that the value of your collateral must be equal to or greater than the loan amount. You also generally can’t use the same assets to secure multiple loans.

The Bottom Line

Getting a $100k business loan can be difficult, but knowing how to prepare for the process can help improve your odds of getting approved. The important thing is that you do your research on the type of loan you need, the eligibility requirements, and what different lenders offer.

It’s also crucial to make as strong of a first impression as possible. Focus on your business plan and try to make a case for yourself and your business. 

FAQs

How Hard Is It to Get a 100K Business Loan?

It’s possible to get a $100,000 business loan, even if your business has only been operating for a year or two. What matters, though, is that unless your company is well established and has a strong business credit history, your options may be limited to high-interest, short-term loans.

These types of financing can still help you achieve your business goals, but they can be expensive and if you don’t have the cash flow to pay them back, it can ultimately doom your company.

As a result, it’s important to take your time to compare your financing options, and if you have some flexibility, consider waiting until you can qualify for more affordable financing.

Can I Get a $100,000 Business Loan With Bad Credit?

Technically, yes, you can qualify for a business loan of that size even if you have bad credit. But the same rules apply as with new businesses. If you have bad credit, your only options are likely going to be high-interest loans with short repayment terms. 

This means high monthly payments and more strict consequences if you fail to repay. If you have bad credit and need a small business loan, think carefully about other ways you can achieve your goals without resorting to expensive financing. 

You’ll also want to actively pursue ways to build your personal and business credit scores so that you can qualify for better financing options in the future.

Can I Get a $100,000 Business Loan to Start a Business?

Again, it’s possible to obtain this much funding when you’re just starting out, but the terms of the loan may not be satisfactory enough to make it worth it. Instead, consider smaller loans, such as microloans, that may be better tailored to the needs of your business.

Microloans typically max out at $50,000, but they tend to offer favorable interest rates and repayment terms, and you may even qualify for a no-interest loan. 

This may not provide you with enough capital to do what you want, but it can help you get off the ground and prepare yourself for more financing when you need it.

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