Getting a Small Business Loan Today

Before the recession hit, you used to be able to wander into pretty much any old bank with a half-baked plan and a semi-decent credit score and wander off with a sizable small business loan. However, these days, with banks still reluctant to lend money and things getting tighter rather than easier, you’ll need a lot more than charm and a 700 on your credit report.

Your Personal Credit – Not Just Your Credit Scores Will Be Looked At

Your personal credit is still the most important factor in getting a small business start-up loan; however, your entire credit report will now be examined organically and will directly affect the small business loan rate that you’ll receive, if you get a loan at all. The lenders will be checking out your credit history and looking for any signs of instability, such as missed payments or bankruptcy, even if it happened a long time ago. They’ll also consider your credit score, of course, when they figure out what to do with your rate for small business loans.

Have Some Proof of Your Income and Collateral

While unsecured small business loans used to be quite common, today you need to have enough income to show that you can pay off the loan in case the business goes belly up. Your income for at least the past three years will be thoroughly examined and you may also be asked to provide some kind of collateral, such as a certificate of deposit with the bank to back up your small business bank loan.

Have a Business Plan Ready – A Real One

This fundamental of getting a small business loan has not changed and has only gotten stricter. Where once you could get away with a one page proposal, today expect to show up with a binder containing serious research, graphs, and detailed plans for how you will make your business a success. If you don’t, you’ll have a really tough time when you try to get a small business loan.

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