How to Qualify for a Commercial Loan: What Lenders Look For

Getting denied by a bank for a commercial loan can feel like a gut punch—especially when you know your business is ready to grow. Here's what lenders are really looking for and how to give yourself the best shot at getting approved.

“When we were facing some of the toughest times in our business, The Payment HQ stepped in—not just as a service provider, but as a true partner we could trust. Without their honesty, integrity, and unwavering support, we might not be here today.”

-Nikki G

Commercial Loan Basics

Commercial loans for small businesses are designed to help fund major expenses, such as real estate, working capital, and equipment purchases. Unlike personal loans, commercial lending focuses on your business's financial health and potential, not just your personal credit.

There are many types of commercial loans, from lines of credit to term loans. There are also different commercial loan lenders, with some focusing on low-risk businesses while others (including The Payment HQ) work with a broader range of companies, including those considered high-risk.

5 Things Lenders Look For

Discover the top factors that lenders evaluate so you can qualify with confidence.

Creditworthiness

Both your personal and business credit score will be evaluated. A healthy financial history indicates you can responsibly handle borrowed funds.

Time in Business

Typically, the longer you've been in business, the more confidence a lender has that you'll stay in business. Anything less than two years, and a lender may worry about you being forced to close up shop before you've had a chance to repay your loan. That said, The Payment HQ can work with you if you’ve been in business for at least six months.

Debt-to-Income Ratio

Aim to keep your current obligations low, as a high debt-to-income ratio is seen as risky.

Cash Flow & Business Revenue

Commercial lenders want to see that your company is generating steady income; enough to easily cover your loan payments. You’ll need to provide bank statements that show your company holds an appropriate amount of deposits. You increase your chances of being approved if your month-to-month balances stay consistent.

Collateral and Personal Guarantees

Many commercial loans for small businesses require some type of collateral–assets that can be seized should the business default on the loan. Some lenders may also request a personal guarantee, meaning you'd be personally liable if your business can't repay.

Sound intimidating? These safeguards can actually work in your favor, as they show lenders you're all in. That confidence may help you secure better terms.

The Importance of a Solid Business Plan

A comprehensive business plan speaks volumes when applying for a commercial loan. Therefore, before applying, create a business plan that clearly outlines:

• Financial projections
• How you plan to use the loan
• How you plan to repay the funds
• Market opportunities
• What your business does (and why it matters)

Think of your plan like a pitch deck. Why should lenders approve your request for financing?

Choosing the Right Lender

Lenders operate differently; some shy away from certain industries, while others lock you into rigid terms or require an exhausting amount of corporate documentation.

Here at The Payment HQ, we lend differently.

Our team knows numbers on a page don't tell the whole story. Because we're privately owned, we're more nimble and have the bandwidth and freedom to take time to get to know your business and its potential. No long waits, no corporate red tape, and same-day funding available.

What's more, we believe all companies deserve a fair shot at lending, including those in high-risk industries like cannabis. To apply for a business loan through The Payment HQ, all you need is:

• Proof you’ve been in business for at least 6 months
• 4 months of recent checking statements
• $10k minimum in gross sales

Apply for a Commercial Loan Today

Let’s make your next big move happen. Apply today and let The Payment HQ match you with a lender who actually gets your business.