How to Get a Business Loan in Minnesota: Prepare, Qualify, and Choose the Right Option
What to bring, what a Minnesota bank looks for, how long it takes, and which loan fits.
To get a business loan from a Minnesota bank, bring a lender five answers and six documents. The five answers are how much you need, what it is for, how long you need to repay, how it gets repaid, and what secures it. The lender then tests whether your cash flow covers the payments. At Security Bank & Trust Co., most standard requests get a decision two to three weeks after the file is complete.
Know what you need already? See our business loans. Buying a company? See business acquisition loans. Financing rental or commercial property? Read the guide to financing investment real estate.
How do you get a business loan in Minnesota?
Getting a business loan runs in six steps: shape the request, gather the documents, talk with a lender, underwriting, a proposal, then approval and closing. Securing a business loan comes down to the first two, which are yours, and they decide how fast the other four go. At Security Bank & Trust Co., most standard requests get a decision two to three weeks after a complete application.
- Shape the requestAnswer five questions in a few sentences: how much, what for, how long, how it gets repaid, and what secures it.
- Gather six documentsCompany history, three years of tax returns, personal financial statements, current financials, receivable and payable agings, and purchase agreements or invoices. Our commercial loan application checklist walks through each one.
- Talk with a lender before you applyA lender meets you, usually at your place of business, sizes the request, matches the loan type to the use, and tells you early if the structure needs to change. This is the step that saves the most time.
- UnderwritingYour lender and a credit analyst verify the documents, analyze cash flow and collateral, and document the request. You are asked for what your deal needs.
- ProposalWe present an amount, a rate structure, a term and the collateral and guarantees that go with it.
- Approval and closingYour loan is presented and decided in Minnesota, with your lender in the room. After closing, the lender you started with is the one you call.
What should a business loan request say?
A strong request answers five questions before the bank asks them: how much funding you need, what the funds will be used for, how long you need to repay, how the loan will be repaid, and what collateral will secure it. Businesses that walk in with those answers move through review faster and get proposals matched to what they need.
An equipment loan
"We are seeking a small business loan of $500,000 to purchase manufacturing equipment. This equipment will reduce expenses by $100,000 annually and improve production speeds. With a useful life of 10 years, we request a 7-year loan, repaid through cash flow and cost savings. As collateral, we will offer a purchase money security interest in the equipment and business assets."
A real estate loan
"We need a real estate loan of $1,500,000 to buy a 24,000 square foot office and industrial building in Anoka, Minnesota. Moving from leasing to owning will reduce long-term costs. The building, built in 2001, is in good condition but requires $250,000 in improvements. We will repay the loan using cash flow and rental savings."
Each one tells a lender the amount, the purpose, the term, the repayment source and the collateral in a single paragraph. That is enough to shape an accurate proposal the first time.
What documents do you need for a business loan?
Six items cover most of what any Minnesota bank will ask for: a brief company history, three years of business and personal tax returns, personal financial statements, a current income statement and balance sheet, receivable and payable agings, and purchase agreements or invoices. Gather them before your first meeting and you take weeks off the timeline.
We publish the full list. The commercial loan applicant checklist (PDF) is a download with no form to fill out.
| Document | What the lender does with it |
|---|---|
| 1. Company history, ownership and management | Reads the story behind the numbers: what the business has achieved, who runs it, and who owns it. |
| 2. Three years of business and personal tax returns | Evaluates net income, depreciation, interest, liquidity and capital, along with any one-time events. Point out unusual items yourself and the cash flow picture gets clearer. |
| 3. Personal financial statements for principals and guarantors | Assesses the financial health of the owners. A personal guaranty is typically required on a business loan. |
| 4. Current income statement and balance sheet | Catches what the tax returns are too old to show: new contracts, lost customers, recent equipment purchases. |
| 5. Sales, receivable and payable concentrations | Looks at any customer over 10 percent of revenue, and at the aging of what you are owed and what you owe. |
| 6. Purchase agreements or invoices | Verifies the purchase, the terms, and any costs the loan does not cover. |
What do banks look for in a business loan application?
Five things drive most business credit decisions: cash flow, collateral, credit history, management experience and industry conditions. Cash flow matters most, because it is what repays the loan. Underwriting is how a bank confirms that. It means verifying your documents, analyzing cash flow, and structuring a loan that fits both your plans and sound lending practice.
- Cash flow. Your ability to repay the loan from business operations. This is the heart of every review.
- Collateral. Assets that secure the loan, such as real estate, equipment or receivables.
- Credit history. The personal and business track record.
- Management experience. Your team's depth in the industry.
- Industry conditions. Market trends that could affect the business.
Can the business carry the loan? One worked example
An illustration, using the manufacturer from Example 1. A lender starts with net income, adds back the items that did not cost cash or were one-time, and compares the result with a full year of payments on every loan, the new one included.
| Net income | $210,000 |
|---|---|
| Plus depreciation and amortization | $95,000 |
| Plus interest expense | $55,000 |
| Plus a one-time legal settlement | $20,000 |
| Cash flow available for debt payments | $380,000 |
| Less a year of payments on all loans, existing and new | ($290,000) |
| Cushion | $90,000 |
Coverage is where the answer starts, not where it ends. A lender weighs the same figure against how stable the earnings have been and the outlook for the business. Steady earnings and a sound outlook support more borrowing than the same cash flow earned in one unusual year.
Want to run your own numbers? See debt service coverage ratio: the formula and how much you can borrow.
How long does a business loan take?
Most standard business loan decisions at Security Bank & Trust Co. take two to three weeks from a complete application. Initial review of your documents runs 3 to 5 business days. In-depth underwriting runs 5 to 10 business days. A proposal typically follows within two weeks, depending on complexity. Appraisals, construction budgets, SBA requirements and acquisitions add time because third parties are involved. Organized, complete financials do more for speed than anything else.
The measures a lender reads, in plain English
These are commonly used in business lending. They do not define your success as a business. They help a lender understand risk and shape the right structure.
| Measure | How it is figured | The question it answers |
|---|---|---|
| Debt service coverage ratio | EBITDA divided by annual debt payments | Does the business earn enough to cover its loan payments with room to spare? |
| Current ratio | Current assets divided by current liabilities | Is the business stable over the next year? |
| Quick ratio | Cash, receivables and marketable securities divided by current liabilities | How liquid is it right now, without counting inventory? |
| UCA cash flow coverage | Net cash after operations against current debt and interest | Does real cash, and not just paper earnings, cover the payments? |
| Revenue growth trend | Sales over several years | Which way is the business heading? |
| Debt to tangible net worth | Total debt divided by tangible net worth | How leveraged is it compared with its industry? |
What slows a request down
- Incomplete documentation. Missing documents are the most common delay. Our published checklist prevents it.
- A request the cash flow does not support. Size the amount to what the business can repay.
- Unexplained swings in the financials. Be upfront about one-time events, such as a major sale or an unexpected loss.
Two businesses that look alike on paper can still get different answers. Our post on business loan criteria in Minnesota explains why. Financing income property works differently, and commercial real estate underwriting covers it.
Have your numbers ready, or want help pulling them together? One conversation now can save you weeks in underwriting.
Talk With a Business LenderWhich business loan fits what you are financing?
Four structures cover most business borrowing: a line of credit for short-term needs, a term loan for equipment and other long-lived purchases, a real estate loan for your building, and specialized lending shaped to a specific asset or industry. Match the loan to the purpose and to how long the thing you are buying will last.
| Loan type | Best for | Typical shape |
|---|---|---|
| Business line of credit | Inventory, seasonal cash flow, unexpected expenses | Revolving. You pay interest on what you use, and the line is renewed annually. See how a business line of credit works in Minnesota. |
| Business term loan | Equipment, vehicles, acquisitions, capital upgrades | A lump sum with scheduled payments, at a fixed or variable rate. |
| Business real estate loan | Buying, building or refinancing your building | Fixed rates up to 10 years, with a 15 to 25 year amortization. See commercial real estate loans. |
| Specialized lending | Equipment, construction, municipal projects | Structured to the asset and the industry. See equipment financing and commercial construction loans. |
Are business loans secured, and is the rate fixed or variable?
Most bank business loans are secured. The collateral is usually what the loan buys, such as equipment or real estate, or business assets such as receivables and inventory, and a personal guaranty from the owners is typical. A term loan is installment debt with scheduled payments. A line of credit is revolving. Either can carry a fixed or a variable rate. Our post on how interest rates affect business loans covers what sets the rate and what happens at a reset.
We also work alongside Minnesota resources such as the Department of Employment and Economic Development, the Initiative Foundations, and the cities in the communities we serve. For the full landscape, see our guide to Minnesota business loans.
When does an SBA loan make sense?
An SBA loan makes sense when a conventional loan would ask for more down payment or a shorter term than the business can carry, which is common for newer businesses, acquisitions and owner-occupied real estate. The SBA does not lend money directly. It guarantees a portion of a loan made by a bank, which lets the bank offer a lower down payment and a longer term.
- What you gain. A down payment as low as 10 percent, against 20 to 30 percent on many conventional loans, and terms up to 25 years on real estate.
- What it costs. Guarantee fees add cost, collateral is still required, and SBA review adds time. Thirty to 60 days is typical.
- SBA 504 is for fixed assets: real estate, major equipment and construction. The bank finances 50 percent, a Certified Development Company finances 40 percent, and you put 10 percent down.
- SBA 7(a) is for nearly everything else: working capital, inventory, acquisitions, refinancing and real estate, up to $5 million.
- The Minnesota Loan Guarantee Program is the state's own program, administered by the Department of Employment and Economic Development. It is smaller and simpler than a federal SBA file, it can fund startup costs, working capital, equipment, inventory and business property, and Security Bank & Trust Co. is an enrolled lender.
Program details, eligibility and the state program's limits are on our SBA loans page. For a side by side read, see which SBA program fits which purchase.
Where can you get a business loan in Minnesota?
Community banks, regional and national banks, credit unions and nonbank lenders all lend to Minnesota businesses. What differs is where the decision is made, whether you can reach the person making it, and whether that person is still your banker after closing.
Ask any lender four questions. Who decides my loan, and where? Will you come see my business? Who do I call after closing? What else can you do for my operation?
Our answers: your loan is presented and decided in Minnesota by people who can meet you at your business. The lender you start with stays with you. And lending works alongside treasury management, business checking, and the online and mobile tools to run your business from anywhere. Many of our lending relationships begin with a business that keeps its deposits elsewhere, and that is your decision and not a condition of the loan. People bank with people they like and trust, and we work to earn both.
"Casa began its relationship with Security Bank with the opening of its 4th location and first franchise in Edina-Centennial Lakes. Security was pivotal in launching this location and the franchise company. It has been a joy to work with each member of the local team on everything from financing to account setup."
Natalie Standridge, Founder & CEO, Casa de CorazónStart with the lender who leads your market
Our commercial lenders work with Minnesota business owners every day. Brian Wagner leads the bank's lending, and a senior lending officer leads each of our three markets.
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Ward Greeley
SVP, Senior Lending Officer, Twin Cities Metro
Leads our lending team across the Twin Cities metro.
Every business lender is on our team page, and each of our 21 locations can connect you with one near you.
Where we lend in Minnesota
We lend to businesses across the Twin Cities metro and Greater Minnesota. Businesses in Minneapolis, St. Paul and the suburbs work with our metro offices. Our lenders work from 21 offices in 18 communities: Glencoe, Winsted, Brownton and Plato in McLeod County. Waconia, Chaska, Cologne, Hamburg, Mayer and New Germany in Carver County. Minnetonka, Eden Prairie and Wayzata in Hennepin County. Cambridge and Isanti in Isanti County. Ramsey in Anoka County, North Oaks in Ramsey County, and New Auburn in Sibley County.
Business loan FAQ
How do I get a business loan in Minnesota?
Bring a lender five answers and six documents. The answers are how much you need, what it is for, how long you need to repay, how it gets repaid, and what secures it. The documents are on our commercial loan applicant checklist (PDF): company history, tax returns, personal financial statements, current financials, agings and purchase agreements. The lender then tests whether cash flow covers the payments.
What do banks look for when reviewing a business loan application?
Five things drive most decisions: cash flow to repay the loan, collateral to secure it, personal and business credit history, management experience, and industry conditions. Cash flow matters most. Debt service coverage, which compares annual cash flow with annual loan payments, is usually the first number a lender calculates.
What documents do I need to apply for a business loan?
A brief company history, three years of business and personal tax returns, personal financial statements for owners and guarantors, a current income statement and balance sheet, receivable and payable agings, and purchase agreements for anything being financed.
How long does business loan approval take?
At Security Bank & Trust Co., most standard requests receive a decision within two to three weeks of a complete application. SBA loans typically take 30 to 60 days. Appraisals, construction budgets and acquisitions add time because third parties are involved.
What is a debt service coverage ratio?
Debt service coverage ratio, or DSCR, is EBITDA divided by annual debt payments. It answers whether your business earns enough to cover its loan payments with a cushion. Commercial lenders commonly underwrite toward a target near 1.25x, which means cash flow covers the payments with a quarter left over.
How much can my business borrow?
Cash flow sets the starting point. It does not set the limit by itself. Divide the cash flow available for debt payments by the lender's coverage target to find the annual payments the business can support. For example, $380,000 of cash flow at a 1.25x target supports $304,000 a year on all loans, existing and new. How stable those earnings have been, the outlook for the business, and the collateral then shape the final amount.
Are small business loans secured or unsecured?
Most bank business loans are secured. The collateral is usually what the loan buys, such as equipment or real estate, or business assets such as receivables and inventory. A personal guaranty from the owners is typically required as well.
What are the requirements for a secured business loan?
The same six documents, plus the collateral itself. That means a description and value of what secures the loan, such as an equipment invoice, a real estate purchase agreement or an appraisal, and receivable and inventory reports where those are pledged. A personal guaranty from the owners is typical. Lenders advance a portion of the collateral's value, and cash flow still has to cover the payments.
Is a business loan a fixed or variable rate?
It can be either. Term loans are offered at fixed or variable rates, and business real estate loans can be fixed for up to 10 years. What sets the rate is the term, the collateral and the strength of the request, and your lender will lay out the options for yours.
What is the difference between a business line of credit and a term loan?
A line of credit is revolving: borrow as needed, pay interest on what you use, and renew it annually. A term loan is installment debt: a lump sum repaid on a schedule, built for long-term investments such as equipment, vehicles or an acquisition.
Can startups get a business loan?
Yes, though a startup is underwritten differently because there is no operating history to review. Lenders look harder at the owner's experience in the industry, the equity going in, projections that hold up to questions, and collateral. Two programs help: SBA 7(a) loans, and the Minnesota Loan Guarantee Program, a state program that can fund startup costs. Security Bank & Trust Co. is an enrolled lender in it.
What collateral do I need for a business loan?
Depending on the loan, collateral can include accounts receivable, inventory, equipment or real estate. The type and amount depend on the loan purpose and size.
Does the SBA lend money directly to businesses?
No. The SBA guarantees a portion of loans made by banks like Security Bank & Trust Co. You apply through the bank, and the guarantee lets the bank offer more flexible terms.
Should I choose an SBA 504 or 7(a) loan?
Choose 504 for fixed assets like real estate and major equipment, where its low down payment and long-term fixed rate do the most good. Choose 7(a) for working capital, acquisitions or mixed uses.
How do I qualify for a business loan at Security Bank & Trust Co.?
Qualification depends on your financial history, cash flow and collateral, and every situation is different. Our lenders work with you directly and help with preparation before you apply, so you do not need everything in order to start the conversation.
Keep reading
- Business loans and lines of credit at Security Bank & Trust Co.
- Commercial loan terminology, the words in a term sheet
- Balloon payment versus rate reset
- When to refinance a business loan
- How community banks work for a Minnesota business
Start the conversation early
You do not need a finished package to call. Tell a lender what you are trying to do, and you will leave knowing what to bring and what the structure could look like. We were recently named one of the best banks in Minnesota for business owners, and we would like to earn that with you.
Growing, together.
Written by the commercial lending team at Security Bank & Trust Co. All loans are subject to credit approval. Terms, ratios, timelines and examples on this page are general and illustrative, vary by business and borrower, and are set out for a specific transaction in a proposal issued after review. A proposal is not a commitment to lend. SBA loans are subject to SBA eligibility and program requirements. This guide is educational and is not tax, legal or accounting advice. Page last reviewed September 2026.