5 Steps Toward Getting Your Small-Business Loan

NEW YORK (TheStreet) -- Banks are starting to loosen the spigots and lend to small businesses again.

Perhaps it's a sign of an emerging economy or a response to the growth of crowdfunding, which presents a direct threat to banks, with $1 billion raised by just a single crowdfunding firm, Kickstarter.com.)

Whatever the reason, the U.S. Small Business Administration says small-business lending is increasingly robust.

"Borrowing conditions for small businesses have been gradually improving," the SBA says in a recent report. "Commercial banks have eased their lending conditions and terms, though it's still relatively tight compared to pre-recession conditions."

In total, small-business borrowing amounted to approximately $1 trillion last year -- $585 million in business loans outstanding, $422 billion in credit from finance companies "and the rest from a mix of sources," the SBA says.

If you're a small-business owner looking for bank lending capital, how do you get in on the action?

Aim for a smaller bank. Small banks and credit unions are generally more amenable to lending money to local businesses than one of the big bank behemoths. Plus, you'll have a better chance to make your case face to face and can build a strong relationship with a smaller bank based on an ongoing relationships.

Get informed before applying. Before you actually apply for a business loan, talk to a loan officer at a local bank. Find out what steps are needed to get a loan approved -- ask about proper documentation, what bank looks for in a business plan (make sure to have one ready to go before you apply) and what separates the winners from the losers in the business loan application process.

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