How to plan business financing before calling a broker

Plan in five steps, in this order: purpose, amount, timing, repayment capacity and collateral. Each answer rules products in or out, so by the time you reach a broker you are asking "which of these three lenders" rather than "what can I get". The output is a one page plan that a broker can act on the same day.

This guide is about the thinking that comes before any documents. If you already have a plan and want to gather the paperwork, read how to prepare to work with a broker.

Why the order matters

Owners often start with the product ("I want an SBA loan") or the amount ("I need $200,000"). Both are outputs, not inputs. The purpose decides which products are even eligible. The amount follows from the purpose. The deadline removes products that cannot close in time. Repayment capacity removes products whose payments you cannot carry. Collateral decides the price.

The Federal Reserve's 2025 Small Business Credit Survey found that among firms that applied for financing, 56% wanted to meet operating expenses, 46% wanted to refinance or pay down debt, 42% wanted to expand and 26% wanted to repair or replace capital assets. Each of those purposes points to a different shelf of products. Starting anywhere else wastes the first call.

Step 1: Name the purpose precisely

Write one sentence that a stranger could check. "Buy a 2024 Kenworth T680 from a dealer for $142,000" is a purpose. "Grow the business" is not.

The rule underneath the table: match the life of the loan to the life of what it buys. A truck that earns for seven years deserves a five to seven year loan. A payroll gap that closes in six weeks deserves a line you can pay down in six weeks. The SBA's own list of 7(a) uses runs from working capital to equipment, real estate and changes of ownership, which is why SBA loans show up in several rows.

If the money has two purposes, list both with their amounts. Lenders will often split them across two products, and a broker can only do that if you tell them.

Step 2: Put a number on it

Build the amount from the purpose, not from what you hope a lender will approve. For equipment, that is the quote plus tax, delivery and installation, minus your down payment. For working capital, it is the gap between cash out and cash in over the weeks you are covering, plus a cushion.

Write the number with its parts: "$142,000 truck, $9,000 tax and title, less $15,000 down, so $136,000." A broker can defend a built number to a lender. A round number invites a lender to cut it. Our guide on how much your business should borrow walks through the sizing math in detail.

Step 3: Set the real deadline

Write the date the money must be in your account and why. A dealer holding a truck until the 15th, a lease signing on March 1, payroll on Friday. Then write the date you would like it, if different.

The deadline removes products. An SBA loan will not fund a payroll due in ten days. A merchant cash advance can, at a much higher cost. If the real deadline is tight and the cheapest product is slow, your plan should say "bridge now, refinance later" so the broker can price both legs together. See when to start the financing process for lead times by product.

Step 4: Test repayment capacity

This is the step owners skip and lenders never do. Take your average monthly cash available after operating costs and existing debt payments. That is the pool any new payment comes from.

Lenders measure it with the debt service coverage ratio: cash available for debt divided by total debt payments. Clear Value Lending notes that bank term lenders typically want 1.20 to 1.25 or more, and that SBA 7(a) requires at least 1.15 on business cash flow for most loans. In plain words, a lender wants to see $1.25 of free cash for every $1.00 of loan payments.

A quick test you can do in five minutes:

1. Take last year's net profit from your tax return.
2. Add back depreciation, amortisation and interest you already pay.
3. Divide by 12 for a monthly figure.
4. Subtract your current monthly loan payments.
5. Divide what is left by 1.25. That is roughly the largest new monthly payment a conventional lender will accept.

If the payment on your built number is higher than that, you have three levers: a longer term, a smaller amount or a cheaper product. Better to find that out on paper than in a decline.

Step 5: List what you can pledge

Write down what could secure the loan: the equipment being bought, receivables, inventory, real estate, cash in the bank. Note anything already pledged. Most business loans also ask for a personal guarantee, and the SBA's 7(a) submission checklist asks for a personal financial statement from every owner of 20% or more and every proposed guarantor.

Collateral does not usually decide whether a loan is possible. It decides the rate, the term and how many lenders compete. Equipment, receivables and real estate open cheaper shelves. Unsecured working capital costs more because the lender is relying on cash flow alone.

Then call the broker

Now the plan fits on one page. Here is the format brokers like most:

Business: Ridgeline Hauling LLC, Texas, 4 years in business, $1.9 million revenue last year. Purpose: One 2024 Kenworth T680 for a new dedicated route starting March 3. Amount: $136,000 ($142,000 truck, $9,000 tax and title, $15,000 down). Deadline: Funded by February 20. Dealer holds the truck until then. Repayment: Route contract pays $21,000 a month. Current debt payments $6,800 a month. Collateral: The truck. Two older trucks owned free and clear. Credit: Owner FICO around 690. One existing equipment loan, current. Preference: Lowest total cost over fastest funding.

A broker reading that can name the right three lenders before the call ends. Compare it with a lender's published credit box: OnDeck, for instance, states minimums of one year in business, $100,000 in annual revenue and a 625 personal FICO. Your plan shows at a glance which boxes you clear.

What a broker adds to your plan

Your plan is a draft. A good broker pressure tests it against what lenders are approving right now. They may move the amount, suggest a lease instead of a loan, split a request into two products or tell you the deadline calls for a bridge. That is the value: they see dozens of live files a month and know where each lender's box sits this quarter. How brokers match you to lenders explains the process from their side.

Find a broker who fits the plan

Once the purpose is clear, the right specialist is easier to find. Search the register by loan type or by industry. Every entry carries a register number and a last checked date, and verified entries show fees in writing. If you would rather send your one page plan once and be matched, use the match form.