AllBusiness:
Before lenders will grant a small business loan, they need to ensure that the loan will be repaid. Every loan is a risk, but banks and brokers want to take as little risk as possible. They look for businesses that show promise, and they award loans to businesspeople who have solid personal and business financials and are committed to the success of their businesses.
When deciding whether or not to issue you a loan, lenders may look at gross annual sales or revenues, checking account balances, profitability, and the length of time you have been in business. If your business is relatively new, the lender may ask to see a business plan.
If you are just starting your business, include a business plan as part of your loan application. It should include monthly cash flow projections for the first 24 months (36 months for startups). Established businesses should show a schedule of current debts and loan balances, payment schedules, maturity, and available collateral.
A lender will review your personal credit history and FICO score, especially if your company does not have a track record of producing revenue. Among the personal credit information that may be considered are:
* personal credit card debt;
* personal loans;
* liquid assets;
* real estate holdings;
* tax returns;
* personal financial statements.
Check what else lenders consider.
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