Process of Applying for a Small Business Loan – [Step-by-Step Guide]

Process of Applying for a Small Business Loan

All the entrepreneurs who want to grow or establish their businesses should take a small business loan but the proper research of steps to apply is the most crucial. Sometimes, individuals need numerous months in the choosing of right loan accordingly their businesses. The application process is not too complicated but you have to do it accurately in order to enhance the chances of quick loan approval. In this article, we are describing the complete Process of applying for small business loans in dubai, so when you apply through any lender, you will not face the situation of debt application rejection.

Step-by-Step Process to Apply for Small Business Loans  

For your easier understanding, the below-mentioned steps are convenient to follow for the application process of small business loans. Moreover, some lenders also guide you through the complete details of the application procedure. The company of finances Karz provides amazing lending services and also helps their clients in case of any issue during the application.

1. Choose the Loan Type According to the Business’s Need:  

First of all, you will need to figure out which loan type is suitable for your business’s needs. The most common types of debts required for the businesses are:  

For business expansion: When you decide to expand your larger or smaller business, you should avail lump sums of debt through the traditional way of lending. , this debt will be repaid in monthly installments with the including of interest.   

For day-to-day expenses: During the working of your company, no one knows when you will need to get more funds instantly to meet any expense. Credit cards for businesses are available that give huge benefits of providing funds to meet day-to-day expenses.

For start-up: Any new entrepreneur faces difficulty in getting a traditional loan for starting up a new company. In this situation, the good way is to take the debt through a credit card or personal business debts.  

2. Check the Eligibility Requirements: 

The checking of eligibility requirements is very important because without meeting them you will not become an eligible applicant who will get approval on his application of debt. When you select a lender, know about their terms. And then, check if you meet their criteria or not. The most common factors of eligibility are:    

Credit Score: 

Without knowing your credit score, there is no good point in applying for any business loan because you will not apply with confidence that your score is good and will get approval mandatory. The credit bureaus also provide free credit reports. The lenders set a criterion of minimum limit of credit score and even some offer more benefit of lowest interest to applicants of excellent credit score. The qualification of loans through online lenders is much easier as compared to banks because they offer debt service to low credit score applicants. For instance, if your score is low, you should apply through Karz. The reason is that you will not only get the approval but their professionals also help in enhancing the score.   

Working Duration of Your Business: 

Almost every lender in the UAE checks the working duration of your company when you apply for funds. The most common criterion of this term is that the company should operate for at least 6 months to 1 year. For higher funds, the loan provider also demands your active business for 2 years.

Minimum Annual Revenue: 

There is also a specific term of minimum annual revenue for the eligibility. The lender requires the minimum earnings from your business annually. You will only be qualified if your annual revenue is more than the lender’s criterion.

Affordability of Loan Payments: 

After considering the annual revenue, you have to make sure that you can easily afford the loan payments. All applicants enhance their chances of approval through the provision of details of their cash flow. Moreover, it is good to show proof of your savings account, so the lender will get surety you will repay the debt within tenure.       

Total Cost of the Debt: 

The calculation of the debt’s total cost is an effortless task if you read all the terms of the debt. In the terms, there is a mention of the repayment amount per month with interest rate and other additional fees like processing, origination, late payment, etc.  

3. Compare Lender’s Offering of Small Business Loans  

The comparison between the lenders is essential because every lending source has different advantages of loan services. So, it is up to you to decide which one is perfect for your business:  

Online Lenders: 

The small-business loan is widely offered by the online lenders. The APR of such loans starts from 6% and it depends on the loan’s type & size. The borrowers’ credit history and the collaterals are also prominent factors in finalizing the APR. In opposite to banks’ terms, these loan providers’ APR is lower and some online lenders also charge additional fees. But, Karz starts the process of the loan without the requirement of a processing fee which makes the debt’s cost lower.  


The banks are more secure for getting the debt’s services but their eligibility requirements are strict. Further, the approval of debt is not possible if the company has been working for less than two years. The bad credit score applicants are also not eligible. Only choose a bank for getting funds if your credit score is excellent and also you are ready to get a loan by providing collateral.  


The microlenders are a most appropriate option for entrepreneurs of small companies or for starting a new company. These debts come with short terms and you have to provide the complete details of your planning of business, financial statements, etc. Qualifying is easier because of not strict criteria of requirements of collateral, and credit scores.      

4. Collect all Documents of Application 

The requirement of documents is a basic part of the loan process but every lender’s criteria of required documentation is different. The common of them are:  

Business information: The required documentation for the business’s information includes the name, address, & tax proof of your business. In some situations, the lenders also demand a document of your business plan in which you will elaborate on how will you use the funds.    

Financial statements: For showing the financial statements, you will need the documents of annual revenue, bank account statement, etc. It all shows the statement of your company’s profit and loss finances.   

Business owner’s details: All personal details of a business owner will be mentioned in the application. It involves the borrower’s address, ID card, and other factors.    

Collateral: If a lender requires collateral for the loan process, you have to provide the information of your collateral. Banks require more need of collateral than online lenders.   

Guarantee agreement: Some loan providers need the applicant’s signature on the papers of the guarantee agreement. According to this agreement, the borrowers will repay the debt amount within a tenor. In case of loan default, the lender will seize the borrower’s collateral asset.  

5. Apply for an Appropriate Business Debt 

After following the above steps, now you are prepared to apply for a debt for the higher growth of your company. If you prefer the traditional way of lending, then you need to go to the nearest branch of the bank. But, now they also offer the facility of online lending. Before the final submission of the debt application, it is a wiser way to again check the form with all the attached documents. As a result, there will be no chance of any error in the application. For counter-checking applications, you can get help from professionals. It is beneficial especially when you apply for the first time.

6. Review the Agreement 

After the approval of your debt application, the lender will provide the loan agreement papers to you. And, when you sign the contract papers of debt, make sure you are aware of all the terms of it. This agreement contains the details of monthly repayments with interest amount, total debt amount, and other fees, etc. Review all the agreement’s terms and if you find difficulty in understanding any point, you must directly ask the lender. After you sign the agreement papers, the lender will disburse the amount in a few working days. The lenders prefer to transfer the funds to the borrower’s bank account directly.     

Final Verdict

The process of applying to get a small business loan is not too complex if you follow all the steps carefully. The other things you need to consider are the lowest interest rate with lower monthly payments. Before applying, check the eligibility criteria and other factors to ensure that you will get the debt amount instantly without facing the application’s rejection issue. The rates and cost of loans through any lender are different. It is the biggest reason for doing the comparison between the lenders. Choose a lender that offers low-cost loans but with an easier process of applying. In this way, your company will get much benefit from additional financial help and then the repayment of debt becomes not difficult for you.