Before you make the decision about which type of business loan to seek out, you must first make the choice between loans or venture capital. This isn’t necessarily an either/or proposition. However, at some point most of your funding will come from one or the other. If you are not interested in sharing ownership of your company while having discounted the possibility of venture capital, that is fine. Just make sure you’ve considered the options carefully. Now, for the rest of this article we will talk about what borrowing options are available to you.
In the recent past, it was very easy to get a business loan. Typically, you’d just need to show a good personal or business credit score to get funding very quickly and easily. The only trouble is that the small business lending programs in these banks were showing double the default rate. That’s a lot of loss to absorb.
Therefore, your options have shrunken quite a bit. Not only will a traditional bank look at your personal and business credit reports (required), they will also look at the individual late payments for any negative patterns. This would include a pattern of occasionally missing payments or a pattern of missing core payments, like your mortgage. These will typically keep you from getting funding. You will also need to furnish proof of personal and business income. The results must meet the criteria of the bank for approval.
As you can see, your business loan options have dwindled a bit. However, if you keep your credit and finances in good shape, you should still be able to get funding.