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How to Assess Whether a Small-Business Loan Will Work for You

Six tips for finding the right lender to help your startup thrive.

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Illustration: Gwendal Le Bec for Bloomberg Businessweek

If you’ve launched a small business, you know that offers of business financing follow you like a shadow: Myriad proposals from would-be lenders with goofy names arrive via e-mail, on banner ads, and in your accounting software. You’re right to be skeptical. “Don’t just trust what the lender says on its website,” says Rob Stephens, CPA and founder of financial planning company CFO Perspective. “Companies are constantly popping up that don’t last. You want a lender who will provide great service throughout the life of your loan.” (And not make off with your Social Security number or the contents of your retirement fund.) We talked to finance experts about how to find the smartest loan for your business.

Start with the SBA. You won’t go wrong checking the Small Business Administration’s website. Government loans frequently offer lower rates and extended payment terms—though getting one can be slow and may involve lots of bureaucracy, says Keith Chulumovich, CPA and managing director at O’Keefe financial consulting company. “Many programs take significantly longer than banks,” he says. “And the qualification requirements can be overly burdensome and time-consuming.”