How to Apply for a Business Loan (Step-by-Step, Including LLCs and Online Applications)

The short answer: almost anyone with a legitimate business purpose can apply. But "can apply" and "will get approved" are two very different things, and lenders count on you not knowing the difference.

Here is who qualifies to submit an application:

• Sole proprietors — You do not need an LLC or corporation. A sole proprietorship using your Social Security number is enough to apply at most lenders.
• LLCs and corporations — Yes, an LLC can apply for a business loan. In fact, having a registered LLC with its own EIN (Employer Identification Number) often strengthens your application because it shows formal business structure.
• Freelancers and gig workers — If you earn 1099 income, you have a business in the eyes of the IRS and most lenders.
• Startups with no revenue yet — Some lenders, particularly SBA microloan intermediaries, will consider startups. But expect to bring a detailed business plan and possibly collateral.

What matters more than your business structure is your personal credit score, your business revenue history, and your [debt-to-income](/glossary/#debt-to-income) ratio. The SBA reports that roughly 80% of small business loan applications at big banks are denied, according to the Federal Reserve's 2023 Small Business Credit Survey. Knowing why helps you avoid wasting time on applications you are not ready for.

If you formed an LLC specifically to apply for business financing, you are on the right track — but the LLC alone does not guarantee approval. Here is what lenders look for when an LLC applies:

What Your LLC Needs Before Applying

• EIN from the IRS — Free to obtain at irs.gov. This separates your business identity from your personal SSN.
• Business bank account — Lenders want to see 3-12 months of bank statements showing consistent deposits. Mixing personal and business funds in one account is a red flag.
• Operating agreement — For multi-member LLCs, lenders may require this to confirm who has authority to take on debt.
• State registration in good standing — If your LLC's annual report is overdue or your registration lapsed, fix that before applying.

The Personal Guarantee Reality

Here is what most "apply with your LLC" guides leave out: for businesses under $1 million in annual revenue, nearly every lender will require a personal guarantee. That means if your LLC defaults, you are personally on the hook. The LLC structure protects you in lawsuits, not in loan defaults where you signed a personal guarantee.

The CFPB has noted that small business borrowers often do not fully understand personal guarantee terms before signing. Ask the lender explicitly: "Is this a full personal guarantee or a limited guarantee, and what assets are at risk?"

Most business loan applications can now be completed entirely online. Here is the actual process, broken into what happens at each stage:

Step 1: Check Your Credit First

Before any lender pulls your credit, check it yourself. You are entitled to free reports from all three bureaus at AnnualCreditReport.com. Business lenders typically check your personal [FICO score](/glossary/#fico-score) plus your business credit profile (Dun & Bradstreet, Experian Business, or Equifax Business).

Step 2: Gather Your Documents

Online applications are faster, but you still need these ready:

• Personal and business tax returns (2 years)
• Bank statements (3-12 months)
• Profit and loss statement
• Business license or LLC registration
• EIN verification letter
• A clear explanation of how you will use the funds

Step 3: Compare Before You Apply

Every application that results in a [hard inquiry](/glossary/#hard-inquiry) can temporarily lower your credit score by 5-10 points. Some online lenders use a [soft inquiry](/glossary/#soft-inquiry) for prequalification, which does not affect your score. Always ask: "Will this prequalification check affect my credit?" before clicking submit.

Step 4: Submit and Respond Quickly

Online lenders often approve within 24-72 hours, but they may request additional documentation. Delays in responding can stall or kill your application. Keep your phone and email accessible for the 48 hours after submitting.

This is where you need to be especially careful. Can you apply with no income? Technically, yes — no one stops you from filling out the form. But approval without demonstrable revenue or income requires a specific strategy.

Options that may work for low- or no-revenue businesses:

• SBA Microloans — Up to $50,000 through nonprofit intermediaries. The SBA reports the average microloan is around $13,000. These lenders evaluate your business plan and character, not just revenue.
• Community Development Financial Institutions (CDFIs) — Mission-driven lenders that serve underbanked communities. Many accept startups. Find one at ofn.org.
• Secured loans — If you have collateral (equipment, real estate, inventory), some lenders will approve based on asset value rather than cash flow.
• Business credit cards — Based primarily on your personal credit score, not business revenue. You can apply for a business credit card as a sole proprietor, LLC, or corporation.

What will NOT work and what to watch out for:

• Any lender promising "guaranteed approval with no income" is likely predatory. The FTC warns consumers to be skeptical of advance-fee loan scams, where you pay upfront for a loan that never materializes.
• Merchant cash advances marketed to no-revenue businesses often carry effective [APRs](/glossary/#apr) above 100%. These are technically purchases of future receivables, not loans, so they fall outside many state lending regulations.

This is one of the most-searched questions in the business loan space, so let us address it directly. Major banks like Chase offer online business loan applications, but there are important caveats:

• Existing relationship preferred — Most major banks, including Chase, prioritize applicants who already have a business checking account with them. If you do not bank with the lender, expect additional scrutiny.
• Higher minimums — Traditional banks often require $100,000+ in annual revenue, 2+ years in business, and credit scores above 680. Online lenders typically have lower thresholds.
• Slower process — Bank applications processed online still often require in-branch follow-ups, especially for loans above $50,000.

The Federal Reserve's Small Business Credit Survey consistently shows that online lenders approve at roughly 4x the rate of large banks, though at higher interest rates. The tradeoff is speed and accessibility versus cost.

Rather than fixating on one bank, compare multiple lenders simultaneously. Our [best small business loans](/best/best-small-business-loans/) comparison covers approval rates, minimum requirements, and actual APR ranges across lender types.

Several of the questions people search — "can I apply for a business credit card" — suggest confusion about whether a credit card or a loan is the right product. Here is when each makes sense:

One thing most guides skip: many business credit cards report to your personal credit bureaus. That means high [credit utilization](/glossary/#credit-utilization) on a business card can lower your personal [credit score](/glossary/#credit-score). Ask the issuer before applying whether they report to personal bureaus, business bureaus, or both.

If you are still building your credit profile, [credit builder loans](/best/best-credit-builder-loans/) or [secured credit cards](/best/best-secured-credit-cards/) may be a smarter first step before applying for business financing.

The business lending space has fewer consumer protections than personal lending. The Truth in Lending Act (TILA) does not apply to most business loans, which means lenders are not always required to disclose APR in the same standardized way. Here is what to watch:

• Factor rates instead of APR — A factor rate of 1.3 on a 12-month loan sounds low but translates to roughly 55% APR. Always ask for the total cost of the loan in dollars, then calculate the effective annual rate yourself.
• Prepayment penalties — Some online lenders charge you the full interest even if you pay early. Ask: "If I repay in 6 months instead of 12, what is my total cost?"
• Daily or weekly repayment — Merchant cash advances and some online lenders debit your bank account daily. This can devastate cash flow. Know the repayment frequency before signing.
• UCC filings (blanket liens) — Many business lenders file a UCC-1 against all your business assets. This is standard, but a blanket lien means they have a claim on everything — including assets you might need to pledge for future financing. Ask what the lien covers specifically.
• Confession of judgment clauses — Banned in consumer lending but still legal in some states for business loans. This clause lets the lender obtain a judgment against you without a trial. Several states (including New York since 2019) have restricted these, but check your loan agreement carefully.

The CFPB has published guidance urging small business lending disclosure reform. Until those rules are finalized, the burden of understanding loan terms falls on you.

Before you apply anywhere, run through this list. Skipping any item increases your chance of denial or accepting bad terms:

• Pulled your personal credit reports from all three bureaus (free at AnnualCreditReport.com)
• Checked your business credit profile at Dun & Bradstreet (free DUNS lookup)
• Confirmed your LLC or business registration is in good standing with your state
• Separated personal and business bank accounts
• Gathered 3-12 months of business bank statements showing consistent deposits
• Prepared a one-page explanation of how you will use the loan funds
• Compared at least 3 lenders on APR (not factor rate), total repayment cost, and repayment terms
• Confirmed whether prequalification uses a soft or hard credit inquiry
• Asked about personal guarantee terms in writing

If your personal credit needs work before you apply, addressing [charge-offs](/glossary/#charge-off) or [collection accounts](/glossary/#collection-account) first can meaningfully improve your approval odds. For borrowers rebuilding credit, explore [personal loan lenders](/best/best-personal-loan-lenders/) that report positive payment history or consider [credit repair companies](/best/best-credit-repair-companies/) if you need help disputing inaccurate items on your reports.

When you are ready to compare your options side by side, our [best small business loans](/best/best-small-business-loans/) breakdown covers what each lender actually requires — not just what their marketing pages promise.