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How Hard is It to Get a Business Loan in 2025?

How Hard is It to Get a Business Loan in 2025?

2024 ended and 2025 began with significant current events that will shape the American economy as well as the global market. With any new year, business owners are seeking ways that they can grow, expand, and become more competitive in their industry or local market.

As a New Jersey business owner, you might have considered applying for a commercial loan to stabilize your costs or to expand in a new direction.

This raises a question, though. How hard is it to get a business loan in 2025? This can depend on a number of factors like your preparedness, the financial health of your business, and the lender you choose.

Let’s look into these factors in more detail.

The Economic Landscape in New Jersey

New Jersey is one of the most economically diverse states in the nation with the highest population density. Located between two of the country’s largest cities and a long coastline, everything from professional services to tourism has a chance to thrive in the Garden State.

It is worth noting though, that on the other hand, national inflationary pressures, interest rates, and the high price of real estate can affect a business owner’s willingness to buy. In turn, they also directly impact lenders and can influence the criteria used in evaluating loan applications.

In New Jersey specifically, localized challenges such as high property taxes and the competitive cost of living mean businesses need to carefully manage cash flow. However, the state’s robust infrastructure and its proximity to major markets like New York City and Philadelphia create opportunities for growth. Knowing how these dynamics play into the lending process is crucial for business owners.

Types of Commercial Loans to Consider

No single type of loan will suit all businesses. Knowing the type of loan that you think will best suit your needs can be a powerful starting point in consulting with a lender.

Here are some common loan types for you to consider:

Line of Credit: a flexible loan option where a business is given access to a set amount of financing, which can be drawn  as needed, similar to a credit card. Interest is only repaid on the exact amount used. It is best for businesses with fluctuating cash flow or ones who need quick, short-term funding.

Term Loan: a traditional loan where a business borrows a lump sum upfront and repays it over a fixed period (usually 1 to 10 years) with a set interest rate. These loans are ideal for businesses that want a fixed, predictable cost for a large purchase, such as large-scale hiring initiatives.

Commercial Mortgage: a loan specifically used to finance the purchase of commercial real estate (like office buildings, warehouses, or retail spaces). This type of loan uses the real estate itself as collateral. It is perfect for businesses looking to change locations or to add an additional location.

Construction Loan: a short-term loan designed specifically for funding the construction or renovation of commercial properties. These loans are typically interest-only during the construction phase, with full payments beginning once construction is complete.

Equipment Loan: a loan specifically intended to purchase a piece of equipment significant to a business’s operations. In these loan structures, the equipment itself is the collateral for the loan – meaning it will be repossessed by the lender if the borrower fails to make required payments.

Keep these loan types in mind as you are considering your options. If you are unsure, consult with a lender, another finance professional, or your attorney to help determine the best arrangement for your needs that will spur growth without creating unintended financial hardship long-term.</p<

What Are Lenders Expecting in 2025?

Lenders have more resources at their disposal to evaluate commercial loan decisions than ever before. Though each institution will have its own criteria, you can generally expect that a community bank with experienced lenders will evaluate the following information regarding your business:

1. Credit History and Score

A strong credit history remains one of the most important factors in securing a business loan. For New Jersey-based businesses, personal and business credit scores are often evaluated together, especially for small operations or startups. Maintaining a score above 680 significantly improves your chances, but some lenders may offer flexibility if other factors are strong.

If you have a lower credit score, this could potentially cause a loan application to be rejected or result in a higher interest rate. You can normally determine your creditworthiness regarding a loan by scheduling an initial consultation with your lender.

2. Cash Flow and Financial Statements

You will need to demonstrate that your business generates a steady cash flow as part of your loan application. Lenders will want assurance that your business generates enough revenue to sustainably cover loan repayments.

Work with your accountant or finance department to provide the lender with up-to-date financial statements. Include documents such as profit-and-loss reports, balance sheets, and cash flow projections to present a complete picture of the financial state of the business at the time you are applying for a loan.

3. Business Plan and Purpose of Loan

One of the first questions you will be asked when applying for a loan is one of the simplest: “Why?”

In 2025, lenders want to see more than just a request for funds—they want a clear, actionable plan. Why do you need the loan? Whether it’s for expansion, equipment purchases, or working capital, a detailed business plan strengthens your application.

Beyond the “why,” also be sure to mention how the change funded by the loan will produce a tangible benefit for your business. For example, will it increase revenue? If so, what is the projected increase? The goal of commercial lending is to help your business grow in a significant way, so share this intended outcome with your lender.

4. Collateral

With any loan, risk is implied for both lender and commercial borrower – especially as the loan amount increases in value. In some cases, a business may be required to provide collateral.

This could mean pledging equipment, property, or other assets as a safety net to cover liabilities in the event that you are not able to repay the loan. Take the time to determine the realistic value of your collateral in case this is necessary to secure your loan.

Challenges Facing New Jersey Businesses in 2025

Commercial Loan Interest Rates

With any loan arrangement, interest rates can be a sticking point for many businesses that are considering borrowing. Interest rates are still high compared to pre-pandemic figures. This can mean higher monthly payments and the need for a stronger financial cushion. 

While fixed-rate options can provide flexibility, you can also consider discussing variable-rate options with your lender. If rates are expected to stabilize or decline significantly in the future, this could potentially lead to more savings over time. However, if they were to continue climbing, this could also result in higher payments over time as well. 

If you want to know more about current interest rates, you can check current NJ loan rates here.

Increased Documentation Requirements

Lenders require a significant amount of documentation to ensure that borrowers can manage their debts responsibly. While this task can be burdensome, it also presents an opportunity to demonstrate your business’s financial health and long-term viability.

Prepare a comprehensive package to show to your lender. Include points of information like tax returns, licenses, permits, and financial projections to set yourself apart and demonstrate that you have a clear understanding of your business’s current state and where it’s heading.

Competitive Loan Market

The rise of fintech lenders has made the loan market more competitive, but not all options are created equal. Online lenders often offer speed and convenience but may charge higher interest rates or fees.

For many New Jersey businesses, community banks remain a trusted partner due to their personalized service and local expertise. You will be working directly with financial professionals who understand your business, the community it serves, and the unique challenges and opportunities you face. These will all be considered in determining the final loan structure and terms.

Industry-Specific Challenges

Some industries may face unique conditions in the loan application process. For example, if your industry is facing a historic downturn nationwide or globally, this could affect the terms of the loan. Be sure to acknowledge this in your loan application process as well as any plans that you have for your business to persist through these perceived obstacles.

Tips for Securing a Loan in 2025

If you have decided that you want to pursue a business loan in 2025, this could prove a moment that changes your business trajectory in a significant way. Here are some tips for securing a loan when you are ready to apply: 

Build Strong Relationships: Community banks in New Jersey are more eager to invest in local businesses compared to larger national banks and credit unions. Through regular communication and maintaining an account, you can improve your chances of loan approval. 

Leverage Local Resources: New Jersey offers a variety of resources to support small businesses, from the New Jersey Economic Development Authority (NJEDA) to local Small Business Development Centers (SBDCs). These organizations can help you refine your business plan, identify grants, and prepare for the loan application process.

Improve Financial Literacy: Understanding your business’s financial health is non-negotiable. If you want to educate yourself further on your finances, look for local workshops to attend or work with a financial advisor for personalized guidance. The better you can articulate your numbers, the more confidence you’ll inspire in lenders.

Why Persistence Pays Off

While the road to securing a business loan can involve hard work and discipline to gather the proper business information, it is far from impossible. Persistence and preparation are your greatest assets. While the process might involve multiple applications or negotiations, each step is an opportunity to refine your approach and strengthen your business case.

New Jersey is known for many things, and its strong entrepreneurial spirit is one of them. Whether you’re launching a tech startup in Jersey City or modernizing a family-owned diner in Bergen County, the right financing solution can unlock your business’s future.

Get a Commercial Loan for Your NJ Business

At Freedom Bank, we leverage our local expertise and passion for working with Garden State entrepreneurs to help business owners take that meaningful next step in their financial futures. If you are considering a loan as the next step in your professional growth, contact us at any of our branch locations to schedule a consultation with a lender. 

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