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How To Apply For Your First Business Loan: Everything You Need to Know

As a new business owner, you’ve got a lot on your plate. You may dream about what you’d do with your first business loan, but actually researching the process and taking that step to apply can feel overwhelming. Luckily, we’ve broken down pertinent information for you in this handy guide to applying for your first business loan. Keep reading to learn the 4 steps to apply for a small business loan!

Get your credit in order

If you’ve never applied for a business loan before or don’t have a substantial business credit history, you may need to use your personal credit to obtain the loan. As with any loan application, such as a mortgage, you’ll want to get ready beforehand by monitoring your personal and/or business credit and making sure your credit report is in good order and your score is where you want it before you apply.

Personal vs. Business Credit Score: What you need to know

You’re probably already familiar with personal credit scores. While the FICO® Score may be the most well-known and used, there are other models for calculating a personal credit score. First Exchange Bank generally uses personal credit scores for business lending.

However, there are other credit scoring models specifically for businesses. While personal credit scores generally range from 300-850, business scores tend to have a smaller range, from 0-100 (so don’t be alarmed if you see a low score). Another difference is that business credit reports are associated with EINs instead of Social Security Numbers. Also, your business credit score can be checked by anyone, anytime. You don’t need to give permission.

The PAYDEX® Score is one of the most popular business scoring models. Ranging between 1 and 100, it is a dollar-weighted indicator that reflects a business’s past payment performance.


Determine what type of business loan you need

Once you have your credit score and report in order, it’s time to narrow your options and decide on the type of commercial loan that will best meet your needs and goals. You can start your research process online, with articles like this one, but you don’t have to make the final decision on your own. When you have a relationship with a business lender, they will ask questions and have conversations with you to make a recommendation on the best type of business loan for you.

  • Commercial Real Estate Loans: This type of business financing helps commercial real estate investors purchase or invest in commercial real estate property. It also helps business owners find new space for their operation through the purchase of land to build on or existing buildings to occupy.
  • Commercial Construction Loans: Use this type of business financing to build a new commercial property, make improvements to a tenant-occupied commercial property, or to purchase and renovate an existing commercial building.
  • Business Lines of Credit: Tap the flexibility of a commercial credit line to manage seasonal fluctuations in cash flow and other short-term funding needs such as inventory and working capital.

Gather your documents

Part of the business loan application process is about telling a powerful story about your business and its future. To tell that story, you’ll need the right supporting documents, including:

  • Business plan so your lender knows how you intend to use the money you borrow (If you don’t already have one, the West Virginia Small Business Development Center has many great resources, including help with starting a business).
  • Government-issued ID card or Driver’s License
  • Your personal resume as the business owner
  •  Business license(s)
  • Proof of ownership as a sole proprietorship, S-corporation, C-corporation, or LLC
  • 2-3 years of business tax returns
  • Personal financial statement
  • Business financial statements such as the balance sheet and income statement

As with choosing a type of business loan, our lenders will help you compile the appropriate list of documents needed to support your application. It’s worthwhile to start getting organized now, but don’t worry about forgetting something–we’ll help you along the way.


Apply for your business loan

Finally, you’re ready to take the big step! In addition to all the other research you’ve done, you may have looked into commercial lenders. It’s important to find a lender you feel comfortable with, in addition to one that can provide financial advice and meet all your financing needs.

Community banks are a natural partner to small businesses, known for giving the majority of small business loans across the country and investing in the communities we serve. If you don’t already have a business banking relationship with First Exchange Bank, contact our lenders today to experience the personalized service you’ll get here. You can find a list of our commercial lenders here.

4 Questions to ask when applying for a business loan

Come prepared for your first conversation with a lender—tuck these 4 key questions in your pocket!

  1. When will I know if my loan is approved?
  2. What is the interest rate on this loan?
  3. What is the total cost of the loan?
  4. What is the payment schedule and when is the first payment due?


Apply for a Business Loan in West Virginia!

As your longtime community bank in North Central West Virginia, First Exchange Bank has made a conscious decision to remain independent and to invest in the communities we serve. You’re looking for a business lender and we are here to develop a relationship over the life of your business that will support your goals for growth. Contact one of our commercial loan officers or visit your local First Exchange office in Mannington, Fairmont, Morgantown, Hundred, Fairview, or White Hall, WV. We possess the local business expertise you need to take your operation to the next level!


Starting a business in Morgantown, WV? Check out our Guide to Starting A Business in Morgantown.


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