Key takeaways
- Start from the purpose: one-time investments fit term, SBA or equipment financing; recurring needs fit a line of credit or working capital.
- Most decisions start with your last 4 months of business bank statements, time in business and credit.
- Compare offers on total payback and payment schedule, not just the quoted rate.
1. Decide what the money is for
The purpose of the funding points to the right product. A one-time purchase with a long payoff (a building, a major piece of equipment, an acquisition) fits a term loan, SBA loan or equipment financing. Recurring or unpredictable needs (payroll gaps, inventory, slow months) fit a line of credit or working capital.
Write down the amount, what it will pay for, and how the business will repay it. Lenders ask these questions, and having clear answers makes every conversation faster.
2. Know your numbers
Before applying, gather the figures every provider will look at:
- Average monthly revenue (deposits) over the last 4–6 months
- Time in business, counted from your business formation or first revenue
- Personal credit score of the owners
- Existing business debt, including any open advances
- Number of negative-balance days or overdrafts in recent statements
3. Match the product to your profile
Banks and SBA lenders offer the lowest rates but expect two or more years in business, good credit and full financial statements, and they take weeks. Online lenders and alternative funders decide in hours or days and accept a wider range of profiles, at a higher cost.
The best approach is to start with the cheapest option you realistically qualify for, and only move to faster, more expensive products when timing or eligibility requires it.
4. Prepare your documents
- Recent business bank statements (usually the last 4 months)
- Government-issued ID for each owner
- Business EIN and ownership details
- For larger loans: business and personal tax returns, profit and loss statement and balance sheet
- For equipment: the vendor's quote or invoice
5. Compare offers on total cost
Offers can be quoted as an APR, an interest rate, a factor rate or a total payback amount, which makes them hard to compare. Look at the total amount you will repay, the payment amount and frequency, fees deducted from the funding, and whether paying early saves money.
A funding specialist can put offers side by side for you; you can also use our calculators to convert factor rates into an estimated APR.
6. Close and plan repayment
Read the agreement before signing, confirm when the first payment is due and make sure the account that will be debited has the cash to cover it. Paying on time builds the history you need for larger, cheaper funding next time.
Sources
BFG Funds is not a lender. We connect businesses with independent lenders and funding providers. Amounts, rates, terms and timing are set by each provider after its own review of your business (bank statements, revenue, time in business, credit profile and more) and are not guaranteed.