---
title: Get Loan Ready | Determine If a Loan Can Help Your Business | Craft3
description: Determine if a loan can drive your business success. Learn how to assess affordability and create a solid plan before applying for financing.
image: https://info.craft3.org/hubfs/Commercial%20Nurturing/Getting%20Loan%20Ready%20Social%20Cards/Will%20a%20Loan%20Help%20Your%20Biz.jpg
---
[](https://info.craft3.org/?hsLang=en)
- [Donate](https://www.craft3.org/get-involved/donate)
- [contact](https://www.craft3.org/contact)
- [Log in](https://info.craft3.org/cs/c/?cta_guid=49d84213-8cf7-4278-877b-afc5342732be&signature=AAH58kESiSVPUHWmWP8gbJejVRtUAhPH5A&placement_guid=b15c7f52-ce34-4fd4-9d87-9639b9128b46&click=7b8e4b39-dd0e-4ba5-a544-3ecc1d37a31f&hsutk=3800186dc6585f1895d3a9160da73e5a&canon=https%3A%2F%2Fwww.craft3.org%2Fhomeowner-loans%2Fhome-energy&portal_id=6162194&redirect_url=APefjpE7HthQII34yr8RgyuOZp42K38W-duBRb8EtzhRorh-_zDRCie1hkYgx6PNHBFHUFP1XQCt76OXaDjSbQ4Jmr9_1hC8_xhD7HOYzsp-5fv479B4D3BDeU65vSgjjWdYrp8KfLZZ9hsQoyBC-OL1WAFFRYT50nh6-9Ql6OzzaxYYC4bZaeWlmVV1A0gAC1_a0uUQ8RmnTHALqfuPOwu6gN7rNJ46k6YnvYzxrykAx78JNjxRWoHTQYngOKuywdSC9Eb3qTSx&__hstc=231603520.3800186dc6585f1895d3a9160da73e5a.1679976021137.1679986500007.1679989498933.4&__hssc=231603520.4.1679989498933&__hsfp=32358173&hsLang=en)
[](https://www.craft3.org/)
- Business Loans
- [General Business Loans](https://www.craft3.org/business-loans/business)
- [Bridge Loans](https://www.craft3.org/business-loans/bridge-loans)
- [Owner-Occupied Commercial Real Estate Loans](https://www.craft3.org/business-loans/real-estate)
- [Construction Loans](https://www.craft3.org/business-loans/construction)
- [Islamic Financing](https://www.craft3.org/business-loans/islamic-financing)
- [Not sure where to start?](https://www.craft3.org/business-loans)
- Loans for Homeowners
- [Clean Water Loans](https://www.craft3.org/homeowner-loans/clean-water)
- [Oregon](https://www.craft3.org/homeowner-loans/clean-water/oregon)
- [Washington](https://www.craft3.org/homeowner-loans/clean-water/washington)
- Get Involved
- [Get Involved](https://www.craft3.org/get-involved)
- [Donate](https://www.craft3.org/get-involved/donate)
- [Community Impact Investment Note](https://www.craft3.org/get-involved/community-impact-investment-note)
- [Mission-aligned Investments](https://www.craft3.org/get-involved/mission-aligned-investments)
- [Grants](https://www.craft3.org/get-involved/grants)
- [Partnership Opportunities](https://www.craft3.org/get-involved/partner)
- [Supporters](https://www.craft3.org/get-involved/supporters)
- Tools
- [For Bankers](https://www.craft3.org/tools/bankers)
- [For Businesses](https://www.craft3.org/tools/business)
- [For Contractors](https://www.craft3.org/tools/contractors)
- [For Investors](https://www.craft3.org/tools/investors)
- Impact
- [Our Impact](https://www.craft3.org/impact)
- [Customer Stories](https://www.craft3.org/customer-stories)
- About
- [Our Story](https://www.craft3.org/about)
- [Our Team](https://www.craft3.org/about/team)
- [Our Board](https://www.craft3.org/about/board-members)
- [Portfolio](https://www.craft3.org/about/portfolio)
- [Financials](https://www.craft3.org/about/financials)
- [News](https://www.craft3.org/blog)
- [Career Opportunities](https://www.craft3.org/about/careers)
- [Donate](https://www.craft3.org/get-involved/donate)
- [contact](https://www.craft3.org/contact)
- [Log in](https://info.craft3.org/cs/c/?cta_guid=49d84213-8cf7-4278-877b-afc5342732be&signature=AAH58kESiSVPUHWmWP8gbJejVRtUAhPH5A&placement_guid=b15c7f52-ce34-4fd4-9d87-9639b9128b46&click=7b8e4b39-dd0e-4ba5-a544-3ecc1d37a31f&hsutk=3800186dc6585f1895d3a9160da73e5a&canon=https%3A%2F%2Fwww.craft3.org%2Fhomeowner-loans%2Fhome-energy&portal_id=6162194&redirect_url=APefjpE7HthQII34yr8RgyuOZp42K38W-duBRb8EtzhRorh-_zDRCie1hkYgx6PNHBFHUFP1XQCt76OXaDjSbQ4Jmr9_1hC8_xhD7HOYzsp-5fv479B4D3BDeU65vSgjjWdYrp8KfLZZ9hsQoyBC-OL1WAFFRYT50nh6-9Ql6OzzaxYYC4bZaeWlmVV1A0gAC1_a0uUQ8RmnTHALqfuPOwu6gN7rNJ46k6YnvYzxrykAx78JNjxRWoHTQYngOKuywdSC9Eb3qTSx&__hstc=231603520.3800186dc6585f1895d3a9160da73e5a.1679976021137.1679986500007.1679989498933.4&__hssc=231603520.4.1679989498933&__hsfp=32358173&hsLang=en)
- Business Loans
- [General Business Loans](https://www.craft3.org/business-loans/business)
- [Bridge Loans](https://www.craft3.org/business-loans/bridge-loans)
- [Owner-Occupied Commercial Real Estate Loans](https://www.craft3.org/business-loans/real-estate)
- [Construction Loans](https://www.craft3.org/business-loans/construction)
- [Revolving line of credit for food and beverage processors](https://www.craft3.org/business-loans/revolving-line-of-credit)
- [Islamic Financing](https://www.craft3.org/business-loans/islamic-financing)
- [View All](https://www.craft3.org/business-loans)
- Loans for Homeowners
- [Home Energy Loans](https://www.craft3.org/homeowner-loans/home-energy)
- [Pacific Power (Wash.)](https://www.craft3.org/homeowner-loans/home-energy/pacific-power-wa)
- [Pacific Power (Ore.)](https://www.craft3.org/homeowner-loans/home-energy/pacific-power-oregon)
- [NW Natural (Wash.)](https://www.craft3.org/homeowner-loans/home-energy/nw-natural-wa)
- [NW Natural (Ore.)](https://www.craft3.org/homeowner-loans/home-energy/nw-natural-oregon)
- [Seattle City Light](https://www.craft3.org/homeowner-loans/home-energy/seattle-city-light-wa)
- [Portland General Electric](https://www.craft3.org/homeowner-loans/home-energy/pge)
- [Clean Water Loans](https://www.craft3.org/homeowner-loans/clean-water)
- [Oregon](https://www.craft3.org/homeowner-loans/clean-water/oregon)
- [Washington](https://www.craft3.org/homeowner-loans/clean-water/washington)
- [ADU Loans](https://www.craft3.org/homeowner-loans/adu-loans)
- [Craft3 ADU Loans](https://www.craft3.org/homeowner-loans/adu-loans/craft3-adu-loans)
- [BackHome ADU Loans](https://www.craft3.org/homeowner-loans/adu-loans/backhome-adu-loans)
- Get Involved
- [Get Involved](https://www.craft3.org/get-involved)
- [Donate](https://www.craft3.org/get-involved/donate)
- [Community Impact Investment Note](https://www.craft3.org/get-involved/community-impact-investment-note)
- [Mission-aligned Investments](https://www.craft3.org/get-involved/mission-aligned-investments)
- [Grants](https://www.craft3.org/get-involved/grants)
- [Partnership Opportunities](https://www.craft3.org/get-involved/partner)
- [Supporters](https://www.craft3.org/get-involved/supporters)
- Tools
- [For Bankers](https://www.craft3.org/tools/bankers)
- [For Businesses](https://www.craft3.org/tools/business)
- [For Contractors](https://www.craft3.org/tools/contractors)
- [For Investors](https://www.craft3.org/tools/investors)
- Impact
- [Our Impact](https://www.craft3.org/impact)
- [Customer Stories](https://www.craft3.org/customer-stories)
- About
- [Our Story](https://www.craft3.org/about)
- [Our Team](https://www.craft3.org/about/team)
- [Our Board](https://www.craft3.org/about/board-members)
- [Career Opportunities](https://www.craft3.org/about/careers)
- [Portfolio](https://www.craft3.org/about/portfolio)
- [Financials](https://www.craft3.org/about/financials)
- [News](https://www.craft3.org/blog)
- [Donate](https://www.craft3.org/get-involved/donate)
- [contact](https://www.craft3.org/contact)
- [Log in](https://info.craft3.org/cs/c/?cta_guid=49d84213-8cf7-4278-877b-afc5342732be&signature=AAH58kESiSVPUHWmWP8gbJejVRtUAhPH5A&placement_guid=b15c7f52-ce34-4fd4-9d87-9639b9128b46&click=7b8e4b39-dd0e-4ba5-a544-3ecc1d37a31f&hsutk=3800186dc6585f1895d3a9160da73e5a&canon=https%3A%2F%2Fwww.craft3.org%2Fhomeowner-loans%2Fhome-energy&portal_id=6162194&redirect_url=APefjpE7HthQII34yr8RgyuOZp42K38W-duBRb8EtzhRorh-_zDRCie1hkYgx6PNHBFHUFP1XQCt76OXaDjSbQ4Jmr9_1hC8_xhD7HOYzsp-5fv479B4D3BDeU65vSgjjWdYrp8KfLZZ9hsQoyBC-OL1WAFFRYT50nh6-9Ql6OzzaxYYC4bZaeWlmVV1A0gAC1_a0uUQ8RmnTHALqfuPOwu6gN7rNJ46k6YnvYzxrykAx78JNjxRWoHTQYngOKuywdSC9Eb3qTSx&__hstc=231603520.3800186dc6585f1895d3a9160da73e5a.1679976021137.1679986500007.1679989498933.4&__hssc=231603520.4.1679989498933&__hsfp=32358173&hsLang=en)
## Getting Loan Ready
# Determine if a Loan Can Help Your Business Succeed
Whatever a loan enables should improve your business and increase your profits.
### Whatever a loan enables should improve your business and increase your profits.
A loan might help you increase productivity, lower your costs, or grow your sales. If it doesn’t do one of those things, then debt likely isn’t the answer — at least not right now.
For example, if you’re thinking of using a loan to bail yourself out of a difficult situation, that’s a red flag. As is not having a clear sense of how a loan will enable your business to succeed.
Do you have a simple and persuasive explanation for how a loan will improve your business?
- Yes. Congratulations! This is an all-important step in getting ready to apply for a loan.
- No. We recommend you don’t apply for a loan right now and instead work on your [business plan](https://info.craft3.org/loan-ready-business-plan?hsLang=en) and determine how a loan fits into that plan.
#### How much can you afford to borrow?
The industry standard measure of this is your debt-service coverage ratio (DSCR). You can calculate your DSCR by dividing your cash flow (the net profit, plus any interest, depreciation, or amortization expenses) by your debt payments.
Don’t worry if you don’t have exact figures. Play around with the DSCR calculator at right to get a rough idea of how large a loan you can afford.
| | Cash flow |
| --- | --- |
| ** Calculate your DSCR** | --- |
| | Total debt payments |
Your DSCR can tell you how much debt your business can afford.
Let’s say you need a $15,000 automatic pasta machine to really take your lasagna business to the next level. A quick DSCR calculation, however, shows you can only afford a $10,000 loan.
In this case, presuming you have no way to cover the $5,000 shortfall, taking out a loan that only covers 2/3rds of the project cost is likely a bad idea.
Banks and credit unions will typically look at previous performance to see if that history will let you service the debt you’re considering taking on. They often require a DSCR of 1.25 or greater.
Debt Service Coverage Ratio Calculator (DSCR)
[](https://www.omnicalculator.com/finance/dscr)
Szyk, B. and Pál, T. "Debt Service Coverage Ratio Calculator (DSCR)".
Available at [https://www.omnicalculator.com/finance/dscr](https://www.omnicalculator.com/finance/dscr).
NOTE: The interest rate provided above is for illustrative purposes only and may not reflect the actual rate we offer. We suggest using 9.5% for this calculator. For more information, please visit our [Business Loan pages](https://www.craft3.org/business-loans) to explore our rates and terms.
At Craft3, we look at historic DSCR, but we also consider projections if your historic DSCR isn’t high enough to support the loan.
At Craft3, we’re here to connect you with capital—but more importantly, we’re here to help you make smart, informed decisions for your business. That means we’ll never encourage you to take on debt that isn’t aligned with your goals or financial reality.
Before you apply for a loan, take a step back and ask:
- **How will this loan help my business grow or operate more effectively?**
- **Will it increase revenue, reduce costs, or unlock a new opportunity?**
- **Can I realistically repay this loan based on my current and [projected cash flow](https://info.craft3.org/loan-ready-financial-statements?hsLang=en)?**
You should only borrow what you can afford to repay—without putting your business at risk. A responsible lender (like Craft3) will work with you to think through these questions. We want to help you explore whether financing is truly the right next step, or whether there are other ways to move forward until the timing is better.
Remember: the right loan, at the right time, for the right reason can be a powerful tool. But it's just one piece of a long-term business strategy. We're here to help you figure out when it makes sense—and when it doesn’t.
### **Tools and Resources to Help You Get Loan Ready**
Thanks for spending time with this resource — and congratulations on taking a meaningful step toward strengthening your business.
This guide is just one piece of the support we offer small business owners. If you're looking for a deeper dive into [preparing for financing](https://info.craft3.org/definitive-guide-to-getting-loan-ready?hsLang=en), check out our comprehensive **[Definitive Guide to Getting Loan Ready](https://info.craft3.org/definitive-guide-to-getting-loan-ready?hsLang=en)** page.
##### **Start with the Basics**
- **[Glossary of Finance and Business Terms](https://info.craft3.org/hubfs/0.%20Brandfolder%20Assets/Brochures%20and%20Fliers/Craft3_Glossary_of_Terms_Digital.pdf?hsLang=en) **Make sense of unfamiliar financial language. You don’t need to talk like a banker — but understanding their terms and mindset can help you communicate more effectively and make smarter decisions.
- [Determine if a Loan Can Help Your Business Succeed one-pager](https://info.craft3.org/hubfs/Commercial%20Nurturing/Determine%20if%20a%20Loan%20Can%20Help%20your%20Business%20Succeed.pdf?hsLang=en) A printable summary of what you’ve learned here — perfect as a prep checklist or to share with a business partner.
- **Definitive Guide to Getting Loan Ready e-book in [English](https://info.craft3.org/hubfs/0.%20Brandfolder%20Assets/Brochures%20and%20Fliers/Definitive%20Guide%20to%20Getting%20Loan%20Ready%20-%20English.pdf?hsLang=en) or [Spanish](https://info.craft3.org/hubfs/0.%20Brandfolder%20Assets/Brochures%20and%20Fliers/Definitive%20Guide%20to%20Getting%20Loan%20Ready%20-%20Spanish.pdf?hsLang=en) **Our comprehensive guide walks you through everything you need to know to confidently prepare for business financing — from strengthening your financials to telling your business story with impact.
- **Subscribe for Business Tips** Get practical, actionable advice delivered to your inbox — covering everything from business plans to getting documents together.
### **When You’re Ready, We’re Here to Help**
At Craft3, we specialize in working with entrepreneurs who may not fit the traditional mold — and we believe in second chances and fresh starts.
##### **Take the Next Step**
- **[Explore Craft3’s Business Loan Options](https://www.craft3.org/business-loans)** Learn how we support small business owners through accessible, flexible financing.
- **[Submit a Loan Inquiry](https://www.craft3.org/get-started)** You can start the loan process by completing our online form. A lender will then follow up with you to schedule a conversation.
[](https://info.craft3.org/hs/cta/wi/redirect?encryptedPayload=AVxigLKu%2B6IRCrsK9MUHmAoUwlj%2FwPNbRzgxkvFZozvRM6K92GWRKUv33TgqB7YuTx6PNvd%2BTofyUKQvjAcFHsUbQP6AgLr86j4gj9wNzI3VAUivTxYo70o1e5%2FjESwDokqXNb5XSSiUtmPVmxti%2BJ3IwOWkEfTQWU5PpBf0VelugaaLavG4Lbo%3D&webInteractiveContentId=188401657176&portalId=6162194&hsLang=en)
### About Craft3
Craft3 is nonprofit community lender focused on building a thriving, just, and empowered Pacific Northwest. We support entrepreneurs — especially those that have been denied access to opportunity — by offering responsible capital and tools, like this guide, to support you on your business journey.
#### Subscribe
We’ll share relevant stories, news, information, and resources.
- [Accessibility](https://www.craft3.org/accessibility)
- [Privacy Policy](https://www.craft3.org/privacy-policy)
- [Terms of Use](https://www.craft3.org/terms-of-use)
- [NMLS Consumer Access](https://nmlsconsumeraccess.org/)
- [](https://www.linkedin.com/company/craft3/)
- [](https://www.linkedin.com/company/craft3/)
- [](https://www.x.com/craft3org/)
- [](https://www.youtube.com/@Craft3)
Craft3 is an equal opportunity lender and employer. NMLS #390159. Completing an application does not guarantee loan approval or funding. Craft3 (EIN 91-1662698) is a 501(c)(3): all donations are tax deductible. Copyright 2025 Craft3. All rights reserved.