May 18, 2021

How to Get an Industry-Specific Loan for Your Business

As a result, assuming your small business's case is sound, you’ll have a better chance of getting approved by a lender that knows your industry. This industry familiarity is why industry-specific business loans can have higher approval rates and fewer defaults. It’s also why these loans are often well-tailored to your needs. However, to get an industry-specific loan, you’ll need to approach it a little differently than you would for a general loan program. In this post, we’ll show you how to prepare, research, compare, and apply for industry-specific loans.

4 Steps to Getting an Industry-Specific Business Loan

1. Check Your Credit and Gather Your Documents

Even with industry-specific financing, your credit score will help determine your interest rate and whether you’re approved. Due to this, it’s smart to pull your business and personal credit scores from the credit bureaus before shopping for small business funding. By doing this, you can easily eliminate potential lenders who may not be an option based on your credit score. With your credit reports in hand, you’ll also need to gather your business and personal financial information. Of course, every lender is different but the documents you should gather include:
  1. Personal and business tax returns
  2. Business bank statements
  3. Balance sheet
  4. Income statements
  5. Business licenses
While every lender might not require these documents, it’s a good idea to have them all in one place. This will speed up your application process and reflect well on your business.

2. Get Specific With your Business Plan

As mentioned above, an industry-specific lender’s advantage is that they’re familiar with your industry. By making a strong business case, you can overcome the weaker parts of your small business financing application. However, to do this effectively, you have to get specific. Therefore, you shouldn't be afraid to incorporate detailed competitive analyses and data on industry trends. Of course, the other principles of a good business plan still apply for industry-specific loan applications. Here are three other tips you should consider before or as you write your business plan:
  1. Build action into your plan: Provide specifics on how you plan to operate. In your plan, explain what products or services you’ll sell, how you’ll sell them, and what it’ll cost your business.
  2. Show off your competitive advantages: Explain what makes your business unique and how that sets you apart from your competitors.
  3. Back it up with data: Provide current and trustworthy data in your plan. Use industry reports and your business’s financial data and projections.
Like we said, your business plan is critical to your success. If you’d like more tips, check out our post on strategies for writing the best business plan.

3. Apply for Your Business Loan

There are six things we recommend that borrowers look for in any lender. However, with industry-specific lenders, their expertise in your industry is especially important. While many lenders make loans to various industries, that doesn’t mean they’re truly industry-specific. When you’re researching lenders that work within your industry, vet their experience. The best way to do this is to talk to past borrowers. If you have any colleagues who have taken out an industry-specific financing, ask them about their experience. For example, if you own a construction company, consider reaching out to fellow construction business owners to find out how they've acquired additional working capital. You may find that they've worked with specific lenders that have experience working within your industry. Alternatively, you can research industry associations or trade groups to see if they have any financing resources. For example, the Restaurant Finance Monitor is hosting a conference on restaurant financing in November. If you run a restaurant, attending this conference could be a great first step in finding a strong industry-specific loan. Additionally, as you move along the application process, ask your lender directly about their experience. In most cases, you can get a good sense of how knowledgeable they are about your industry just by talking to them. At Fora Financial, we work with a variety of industries, including construction firms, restaurant owners, auto repair shops, and retail stores, just to name a few. To get a free business loan quote, click the link below: New call-to-action

4. Don’t Overlook Alternative Financing

There are several non-traditional loans that are especially useful for certain businesses. While they’re not strictly industry-specific, the chart below displays various financing options and what kind of businesses they work well for.
Type of Financing Works Well for
Bridge loan Construction companies or startups with cash shortfalls between funding stages.
Invoice factoring Any company that sells their services or products on credit.
Equipment financing Businesses that require expensive equipment.
Inventory loans Businesses that require inventory.
Merchant cash advance Companies that make a significant portion of their sales via credit or debit cards.
Even within these financing types, you can find lenders that specialize in your industry. For example, some lenders who make bridge loans specialize in construction-related bridge loans. Others specialize in loans designed to help startups get the resources they need to reach their next funding milestone.

Conclusion: Lean into Industry Expertise

Familiarity breeds confidence; so if you’ve never used business financing before, industry-specific loans are a great place to start. Most experienced lenders understand that most industries operate differently, and will help you select a funding option that best fits your specific needs.