When it comes to applying for credit in your business’ name, it’s important to know what to expect before starting the application process.
A business loan is an excellent way to secure the funding you need to get started or build your business, but not knowing the requirements to get approved, can mean lots of wasted time.
Whether you’re new to business credit or an old pro, you’ll want to read ahead before applying for a business loan, to ensure you’re prepared for what lenders will look for, when deciding to grant credit to your business.
Before lending money, banks and financial institutions will verify an applicant’s ability to make monthly payments.
Like applying for personal credit, a lender will review your business’s financial statements to decide if the business is profitable enough to pay for the loan.
Time in Business
The length of time you’ve been in business is important to show lenders you’re established and likely to remain in business, thus increasing the likelihood of repaying the loan.
Most lenders require a business to be active at least two years before granting credit, so be sure to research the lender’s specific requirements before applying.
As a new business, your credit history will be limited, so lenders will be cautious about loaning to you. They may request a review of your personal credit report to decide your credit worthiness.
Once you establish business credit lines and create positive payment history, lenders will then have access to review your business profile via a reporting agency like Dun & Bradstreet.
If you’d rather not leverage your personal credit to obtain business credit, there are other options you can use, and we’ll cover it in a later blog.
A lender will want to know the type of business you’re running before granting access to funding.
Lenders may have restrictions on the industries they lend to such as gambling, so if your business falls into a category that may be difficult to finance, make sure you choose a lender willing to work with you.
Before you ask a lender to check your business for credit purposes, please make sure it’s properly structured and registered as a legitimate business in your respective state.
Applying for business credit, before your business has been registered, is a surefire way to have your application rejected.
Now that you have the rundown on what it takes to be approved for a business loan, make sure your business checks all the boxes above and you’ll have access to the funds your business deserves.
A business loan can open doors your business needs to thrive, but making sure you’re approved requires effort. By setting up your business profile the right way, lenders are more likely to approve your business for a loan. Ready to learn more about the benefits of business credit? Get your FREE Business Credit Checklist today by clicking here: https://members.flyycredit.com/