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What Criteria is Required for a Business Loan

Getting a Business Loan

If you have an idea for a new business, or a plan for expanding your existing business, your ability to achieve your goals could depend on your ability to receive financing. A transparent understanding of small business loan requirements can better prepare you for the types of questions a bank might ask and the things you will need to provide.

You & Your Business

While business and personal loans are different, you will likely find that your ability to secure financing for your small business is contingent on your own history and characteristics.

Banks expect borrowers to provide fundamental personal insights. This includes current and previous addresses, educational level, criminal record, and a credit report, along with other information. A lender’s willingness to give your company credit is going to depend directly on your financial situation, such as your current income to debt ratio, debt history, and ability to contribute personal assets as collateral.

Obtaining a small business loan may also be determined by your ability to convince your loan specialist that your business plan is viable. This will come down to your experience, education, credibility, and ability to present a well-conceived plan.

Small Business Loan Bank Requirements

What exactly do lenders expect of you when considering your company for a small business loan? Here are some general loan requirements to check off before you submit a loan application:

1. Personal Credit History

Unless your business is already well-established and profitable, your personal credit history will take the place of your company’s financial history. Before you try applying for a small business loan, it’s a good idea to understand where your credit stands with each credit bureau and if any improvements need to be made.

2. Business Plan

In most cases, your ability to repay your business loan will depend directly on the success of your business, so lenders are going to want to see a viable business plan. Business loans are only distributed when there is a predictable rate of return on investment for the capital provided. Your business plan should be a strategic document that includes an overview of your business goals, a competitive analysis, a marketing plan, and well-researched data on price points and cost factors.

3. Business History and Projections

If you have an existing business, your lender is going to want to review a list of the organization’s liabilities and assets to ensure that your business is not financially over-extended. Balance sheets and cash flow statements provide lenders a dynamic representation of whether your business is growing and succeeding, or failing. If your company has not had the chance to build up this type of history, you will need to demonstrate credible projections that give your creditor confidence in your ability to repay the loan.

4. Asset Base

Most banks won’t release finances without securing it against an asset. For a larger corporation, assets may include machinery, office equipment, or any real estate the organization owns. Businesses can also use stock and intellectual property as an asset if it has a fair market value. In some cases, the bank will request collateral. However, it is generally only necessary for low-rate installment debts and start-up loans. Using personal assets is possible, but not always preferable.

5. Industry Experience

Banks rarely gives loans to individuals in a business that they don’t have any experience in. Most creditors will want to know to see the company founders or board members who have experience and knowledge in building a profitable business. If you don’t have experience in your desired industries, add valuable members to your time by seeking business advisors. This will not only help you in obtaining a loan, but these advisors can play an essential role in problem-solving while you feel out a new industry.

Keep in mind that the entire application process is about getting the lender to believe in you and your business. While the above criteria are important, your organization, thoroughness, and belief in yourself while presenting the information can make or break your ability to receive a small business loan.

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Ulysses Martinez
Ulysses Martinez
21:06 05 Jun 20
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Angel  Maldonado
Angel Maldonado
14:27 30 May 20
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Keith Russell
Keith Russell
23:40 29 May 20
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Fanisha Vela
16:05 05 May 20
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Brandon Dickinson
01:04 26 Mar 20
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Bre Udave
Bre Udave
22:59 04 Mar 20
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Steven Lasseson
Steven Lasseson
14:51 28 Feb 20
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Kade Deeyor
Kade Deeyor
21:51 19 Feb 20
Credit Absolute has been a huge help for me. Since the beginning I’ve seen an enormous increase in my credit score. Felicia and Leslie are especially helpful, concise, and very informative. They both always get back to me within minutes if I have any questions or concerns. I would highly recommend Credit Absolute to anyone seeking a better understanding of how Credit Scores actually work or if you’re looking to increase your scores.
Phuong Mai Pham
Phuong Mai Pham
17:56 13 Feb 20
Credit absolute has helped me tremendously over the past few months. My scores for all 3 credit bureaus have increased by 50+ points. I appreciate the education on credit. I am now much more knowledgeable and strategic about when I should and should not use my credit cards. I look forward to my progress as my goal is to purchase a home by the end of the year!
Doug Donaldson
Doug Donaldson
06:13 21 Dec 19
I noticed a few changes on my credit report that had lowered my score which concerned me and after looking at reviews online I decided to set an appointment with Derek at Credit Absolute. I was fully expecting to spend hundreds of dollars for his advice on what I should do to get it back up to where I had it. After consulting with him and looking in depth at my report, he gave me some tips and helped me understand how the 3 bureaus work and what I could do to increase my score. Best of all..... he didn't charge me a penny. Derek is an honest guy, running an honest business, and if you are looking to build your credit score then he is the guy to turn to. It was about a year ago that I met with him and my score is up over 90 points. 10/10 would recommend Derek at Credit Absolute!
Ashley Krolak
Ashley Krolak
21:58 25 Nov 19
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dan uyematsud
dan uyematsud
21:29 13 Nov 19
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nestor victore
nestor victore
22:14 04 Nov 19
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Tina Abbott
Tina Abbott
02:07 01 Nov 19
My experience with Credit Absolute has been nothing but wonderful! The entire staff are very knowledgeable and understanding. Felica is the one of the nicest people.
Christopher Moore
Christopher Moore
15:10 03 Oct 19
Communication with Derick and the team couldn't be better. I spoke directly to Derick and he was upfront, honest and didn't waste time. I would certainly recommend Credit Absolute to anyone who is looking into credit repair. They'll give you an honest overview of where you are and what they can do to help you reach your goals!
David Burgess
David Burgess
19:02 20 Aug 19
Derick and his team have been extremely helpful and informative throughout this entire process. I would recommend to anyone who wants/needs to repair credit quickly! Worth more than the money without question!
steve moore
steve moore
23:32 16 Aug 19
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Zacary Roberts
Zacary Roberts
03:00 26 Jul 19
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Chris Gunn
18:50 25 Jul 19
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Christy Russell
Christy Russell
15:37 25 Jul 19
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Christian Wunder
Christian Wunder
19:35 18 Jul 19
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Baron Adelmann
Baron Adelmann
21:59 26 Oct 17
Derick and his team have helped me tremendously! He explains the process of improving your credit and does all of the work for you! My credit score has improved drastically and I know that I couldn't have done it without the help of Credit Absolute. Because of them, my business has continued to thrive in a way I never thought possible. Thank you Derick and the Credit Absolute Team!
Gabriela Lovelace
Gabriela Lovelace
23:17 30 Jun 17
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Sho Sho Smith
Sho Sho Smith
22:31 16 Feb 17
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Vanity Hernandez
Vanity Hernandez
20:15 19 Jul 16
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Ian Farruggio
Ian Farruggio
19:29 05 Jul 16
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