Key insights:
- Define your business’s funding needs and research lender eligibility requirements before choosing a lender
- Compare banks, SBA-approved lenders and alternative lenders to learn their different benefits
- Take time to review loan factors such as interest rates and fees when comparing offers
According to the 2025 U.S. Small Business Administration report, small businesses employ nearly half (45.9%) of the workforce — but how many of those companies have the funding they need to grow and operate? While they’re a driving force in the U.S. economy, access to capital can still be a challenge for some small businesses.
One popular funding option is exploring small business loans, but selecting a lender that aligns with your specific needs can sometimes be a challenge.
Read on to learn how to choose a small business lender to support your company’s goals.
Consider your small business funding needs
Before you begin comparing lenders, it helps to outline exactly why you need the capital. Think about your main business goal, your target funding amount and the timeline for when you need the money.
For example, a retail shop looking to buy seasonal inventory quickly might need a different solution than a manufacturing company planning a multi-year facility expansion. Another company may need to invest in marketing or hire and train more team members.
Understanding these details can help narrow down the financing options to grow your small business.
Research types of small business lenders
Once you know what you need, it’s time to explore who provides the funding. There are several categories of small business lenders, each with its own advantages and requirements.
Banks and credit unions
Traditional banks and credit unions are often the first stop for businesses seeking capital. They typically offer competitive interest rates and a wide range of financial products. If you already have a business bank account with a traditional institution, see what lending perks it offers.
SBA-approved lenders
The U.S. Small Business Administration doesn’t lend money directly to business owners. Instead, they partner with SBA-approved lenders to offer government-backed loans. These loans reduce the lender’s risk and could offer more favorable terms for the borrower.
Check the lenders’ eligibility requirements for small businesses
Financial institutions typically have specific criteria businesses must meet to qualify for funding. Understanding these requirements before applying for a small business loan could save you time and help you prepare the right documentation. While every lender is different, they generally review the following factors:
- Time in business: Some lenders may require anywhere from 3 months to 2 years in business to qualify
- Annual revenue thresholds: There may be a minimum revenue threshold requirement to qualify for a small business loan. Your revenue may help determine the loan amount or credit limit you can qualify for, too.
- Personal and/or business credit scores: Lenders can use your personal and business credit scores to help evaluate your creditworthiness. Generally, the higher your scores, the better the terms you may be able to qualify for.
- Credit utilization ratio: Lenders like to see low credit utilization. This measures your existing revolving debt compared to your total available credit.
Compare small business loan products
Once you find lenders whose requirements you meet, you can start comparing their specific products. Evaluating the types of business loans they offer can help you find the right match for your financial situation. Keep these characteristics in mind as you review your options:
- Funding amount: Ensure the lender is willing to provide the specific capital amount you need to reach your goals
- Interest rates: Check whether the rate is fixed or variable, as this helps determine the overall cost of borrowing
- Fees: Look for origination fees, application costs or prepayment penalties that could add to your total expenses
- Term length: The loan duration affects your monthly payment and the total interest you pay over time
- Repayment plan: Understand how frequently you’ll need to make payments
- Disbursement time: Consider how long it will take for the funds to deposit into your account once you’re approved
Explore small business lending options with Citi
Choosing the right small business lender takes time, especially when researching different financial institutions and comparing specific loan products. Reviewing eligibility requirements and lender reputations is just as valuable, helping position your company for the capital it needs to achieve its goals.
From flexible lending programs to dedicated business banking specialists, Citi offers a variety of funding and service options tailored to support your small business’s unique journey.
