If you have a small business for which you’re looking to get business loans in the near future, it is important to understand the criteria for approval. We will be discussing these criteria in detail in today’s article.
First, you must realize that the line between your personal credit and the credit of your business is blurred. In the past, it has been fairly easy to get business credit by having a decent personal or business credit score. However, this process is now much more involved. You must demonstrate your personal credit worthiness, as well as demonstrate that you have the income to repay the debt.
As such, you’ll be required to furnish proof of income statements for both your personal income and that of your business. Your personal income is almost as important as your business income, especially if your company is new. The bank wants to see that you have the personal assets to repay the debt in the event that your business is not successful. This is in addition to any other financial documents that may be required in order for you to be approved for a loan.
So you must realize that you must have good personal credit, and you must have a personal credit report with few negative marks on it. You must also have enough personal income to cover a significant portion of the loan if your company is new.
There may be additional requirements for business loans from your local bank. You should discuss these requirements with the lending officer when you apply.