Today, we will be discussing the necessary criteria to qualify for a business loan, more specifically, business loans from traditional lenders at low interest rates.
When determining whether to extend business loans, the first thing a lender will look at is your personal credit. Many people feel their personal credit should not affect their ability to borrow money for their company. However, banks have found that your personal credit is a strong indication of your character and your likelihood of repaying the loan in full and on time. In fact, they will not only look at the personal credit score, but they will also look through the entirety of the report to find any telltale signs of financial troubles.
The second most important factor is your personal and business income. The bank will want to look at your personal income. They will look at it in the context of you being able to repay the loan, which your business borrows, in the event that your business is not successful. Essentially, they want assurance that you will be able to repay the debt, no matter what happens to your company. This is not true for well-established companies that have a solid history of borrowing, but for new companies, this is almost always the case.
Business loans require you to have good personal and business credit. They also require that you have solid personal and business income, which demonstrates your ability to repay them, no matter what.