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Whether you're launching a new venture or scaling up an existing one, having enough capital on hand can be a challenge. Startups often need funds for equipment and overhead, while growing businesses may be looking to renovate, expand, or invest in real estate.

That’s where business loans come in—but securing one from a big bank isn’t always easy. Large financial institutions tend to be risk-averse, prioritizing shareholder profits over personalized support, which can lead to denied applications.

At United Federal Credit Union, we do things differently. Our market development managers and commercial loan officers partner directly with Business Members, offering expert guidance every step of the way to help you qualify for the financing you need.

Interested in learning more about business loans? Let’s dive in.

What Do You Need a Business Loan for, and How Much Do You Need?

There are several reasons why a business may need a loan. Some businesses need funding for overhead costs, like materials and equipment. Other business owners may decide that they no longer want to be a renter and want to buy a building out right.

Create a list of your expenses that you’ll want a loan to cover and determine how much money you’ll need to fund it.

Your list of expenses can include equipment and supplies, rent or property purchase, marketing and advertising, payroll, and inventory. Once your list is complete, calculate the total amount that you’ll need to fund these items.

Lucas Kemper, CEO and Founder of DandyMen Co, says that United played a vital role in guiding him to the right business loan for his men’s grooming product business. He said, “They’re a key player in the process to help set parameters on the amount that they’re lending and the amount that you can afford to pay back and working through that with flexibility and the knowledge around all of those hurdles and roadblocks that come.”

It’s important to outline a loan repayment plan, which a business advisor can help you with. Figure out what payments you can reasonably make, and how long you will need to repay the loan. Consider anything that may come up in the future, including seasonal changes affecting cash flow, which may impact your ability to make your loan payments.

Gather Your Required Documentation

To apply for a business loan, business owners must provide documentation to help show creditworthiness. This includes financial statements, a profit and loss statement (P&L) and a balance sheet. Business owners should also be prepared to show tax returns for the last two to three years, both personal and business, and copies of business licenses and registrations.

Kemper said United played a big part in helping him understand the documentation he needed to show to get a business loan. “The first business loan I ever got was with United. I didn’t know the things I needed to show like the P & L and the balance sheets and the personal finance statements. It was a lot of front-end paperwork, but once that was done, it’s been great. I started with a business loan, then went to a line of credit, and now I’m getting ready to close on my first commercial property with United. It’s been streamlined.”

Gather these business documents to get a business loan:

• Profit and loss statement (P&L)
• Balance sheets
• Personal finance statements
• Business licenses and registration
• Any contracts or leases the business has
• Two to three years of tax returns (business and personal)

Don’t be discouraged if you don’t have all the documents ready right now. There are many successful business owners who met with a financial institution, found out they didn’t have all the required documents, and returned later with the completed paperwork to move forward. United is happy to help Business Members through every step of the process.

Make a document checklist and work your way through it little by little. Contact a United business advisor for assistance.

Understanding Your Loan Options

There are several different types of loans available to business owners, including SBA loans, term loans, and lines of credit.

SBA Loans

SBA loans are backed by the U.S. Small Business Administration, and are a powerful financial tool designed to support small businesses by making capital more accessible and affordable. United Federal Credit Union is a preferred SBA lender, which allows United to streamline the SBA loan process, offering faster decisions and more efficient service to business members.

SBA loans are ideal for startups, expanding businesses, and businesses recovering from financial setbacks. They’re good for businesses just getting started, with limited credit history and modest revenue.

SBA loans offer long-term financing for a wide variety of business needs, including real estate acquisition, construction, renovation, equipment purchases, and inventory.

This type of loan helps businesses make big purchases for things they don’t have all the money for upfront, including high-cost items like land, buildings, and equipment. This can help businesses preserve working capital for other costs, while making sure they get the equipment and other long-term assets they need to fuel their business.

Business Term Loan

A business term loan is a type of financing for businesses that provides the organization with a lump sum of capital, which is then repaid over a fixed period with interest. This type of loan is particularly useful for businesses that need to make significant investments – such as purchasing equipment, expanding facilities, acquiring inventory, or refinancing existing debt, without disrupting day-to-day cash flow.

The repayment schedule for business term loans is typically monthly, though some lenders offer weekly, bi-weekly, or quarterly options, and the interest rate may be fixed or variable depending on the agreement.

Term loans are categorized by their duration: short-term (up to one year), medium-term (one to five years), and long-term (five years or more), with SBA-backed loans sometimes extending up to 25 years.

Business owners who benefit most from term loans include those with predictable income streams and clear plans for using the funds to generate long-term returns. Term loans may also be beneficial for businesses who are looking to expand operations or stabilize cash flow during seasonal downturns. These loans are structured with clearly defined repayment terms and interest rates, helping to make them more manageable for many businesses.

Business Lines of Credit

A business line of credit is like having a money jar you can dip into whenever you need it. Instead of getting all the money at once like a regular loan, you get approved to borrow up to a certain amount, and only take what you need, when you need it.

You can pay back just what you used, plus interest. If you need more money later, you can use it again without asking for a new loan.

This is helpful for businesses that have ups and downs – like a shop that sells more during holidays or a company that needs to buy supplies before getting paid by customers. It’s like having a safety net that helps keep things running smoothly when money is tight or when a good opportunity pops up.

Commercial Real Estate

Commercial real estate loans help businesses buy a big space like an industrial kitchen or an office. A commercial real estate loan is useful for businesses that want their own space instead of renting or need a special kind of building to do their work.

Jodie Wang secured a real estate loan with United for her dog boarding business, Real World Canine. She said, “I knew I didn’t want to stay in a rental because you are subject to the whims of your landlord. We had a lot of problems with maintenance issues with the building, which the landlord never addressed. It was just horrible. We definitely knew we wanted a building, and we shopped around and we finally found this place. This was an automative garage and I think we’ve made it work.”

Construction Loan

If you're a business owner planning to build or renovate a commercial space, a construction loan can help you finance the project from start to finish. These loans typically cover the cost of land, materials, labor, and permits. To get started, you'll need a detailed bid from your builder and an appraisal of the property. The lender will also check your credit, verify your income, and require a down payment—similar to a mortgage process.

There are different types of construction loans to consider. A construction-only loan provides short-term funding for the build and requires a separate mortgage afterward. A construction-to-permanent loan combines both phases into one, saving you from paying closing costs twice. During construction, you typically make interest-only payments on the funds that have been used so far.

Check Your Eligibility

To qualify for a business loan, the business owner and partners must have good personal credit and business credit. A business must also show how long they’ve been in business, and annual revenue. When applying for a business loan, owners must provide a business plan and financial projections.

Eligibility for a term loan often depends on the business’s creditworthiness, operating history, and financial stability, with lenders evaluating factors such as annual revenue, industry risk, and existing debt obligations.

Startups may face greater scrutiny since they haven’t been in business for long. Business owners can overcome this by providing a more detailed, comprehensive business plan that includes the company’s goals, market strategy, financial projections, and loan repayment plans.

Research and Compare Lenders

Research financial institutions for your business loan. Shop around and compare interest rates, fees, and repayment terms for the business loan.

If personalized help and being able to get ahold of someone is important to you, research reviews of other business members and learn what they have to say about their experience working with the bank or credit union.

Personalized help is ideal for business owners who would like someone to contact to ask questions, get advice, and provide guidance on how to make plans for future business goals.

Kemper says that he maintains a close relationship with his contacts at United Federal Credit Union to keep his growing business on track financially. “I can almost treat them as a committee or board, shooting ideas, looking at where I’m at and where I’m wanting to go and giving me their professional response in the banking world. They keep me on the correct path.”

Getting a business loan from a big bank may mean working with a different person every time you call, while doing business with a local credit union may provide you with an advisor who will stay with you for your entire business relationship.

Wang said, “I reached out to SBA first. They told us that their partner was United. Then I was introduced to Stefan. Stefan is awesome. He’s been great and we’ve actually done a good loan since and lowered the interest rate. I do feel that I can always just call and reach out to Stefan. I can call Brandi. It’s not hard to get to people.”

Want an expert in your corner? Make an appointment with a United Commercial Loan Officer to learn more about United business loans.

Apply for the Loan

Once your business meets requirements, you have your documents ready and you’ve done your research on financial institutions, you may be ready to apply for the business loan. Schedule an appointment and gather your documents.

Make Any Necessary Changes

You may not get approved for a business loan the first time around. Try not to be discouraged if that’s the case! Make a list of action items for what you need to improve and take the necessary steps. You’re not alone in the process. Reach out to a loan advisor for help and advice - that’s what they’re here for.

Review and Accept the Offer

If you do get approved for a loan – great! Review the details of the loan and make sure that you can uphold the agreement. Once you feel comfortable, accept the offer.

Use the Funds Wisely

Once you’ve been approved for a business loan and gain access to the funds, it’s important to create a plan to use the funds wisely. Be sure to make your payments on time and keep in good standing with your financial institution.

Let’s review what we covered:

How to Get a Business Loan

1. Outline the purpose of the loan
2. Estimate how much funding is required
3. Determine what loan term and repayment plan works for you
4. Check your credit score – both personal and business
5. Gather your financial documents:
6. Tax returns (two to three years)
7. Bank statements
8. Profit & loss statements
9. Balance sheets
10. Prepare a business plan
11. Choose the right loan type
12. Research lenders
13. Check eligibility requirements
14. Organize legal documents
15. Apply for the loan
16. Follow up and stay on top of your application status

For more information about business banking, visit United’s business page and find a local business advisor to take the next step.