How do I get a Business Credit Loan for My Company?

If you are a small business owner and are self employed as a sole proprietor you will have the option of applying for credit either in your own name or in your company's name. Whatever type of business entity your company works under, all will need to provide a well thought out and written business plan. The business plan needs to be well organized and should give prospective lenders an idea where your company stands financially today as well as what the long term prospects are for future company income. A well thought out business plan that is delivered professionally says a lot to the prospective lender about you and your company.

An added bonus for the business plan is that you can use it to manage yourself and your company and use it as a guideline for goals and performance. Make sure you make several copies for the lender and for yourself. If you are a sole proprietor you will probably be asked to supply information about your personal financial situation as you are personally responsible for the company. In these situations many lenders want to see that you are responsible in both your company and personal financial areas. Many lenders will also take into consideration the length of time your business has been active and the ability to show a profit.

Types of Business Loans Available

There are many types of business loans and loan sources available to help you find the credit loan you need. But there is an old saying that if a business is going to fail it will fail in the first three years of business. Therefore it is crucial you look at where your company is in terms of length of time in business as well as what type of funding you are requiring. To know what type of lender to go to for a loan request it is best to know just what stage your business is at. This will enable you to focus on the right type of lender or financial institution. The reason this is so important is that many financial lenders target specific loan types or specific types of companies. The lender will often also have limits on the amount of funds they have available for different situations or loan types. Examples of different types loans are:

1. The Micro Loan is a loan in the amount of $5-35,000 and can be used for any small business use.

2. SBA Loan is a loan given to a business from a normal lending institution, but the loan is guaranteed by the Small Business Association. (SBA only guarantees money)

3. Development Financing is a loan to businesses to purchase fixed assets. These loans are usually long term loans with fixed rates of interest.

4. Import-Export Loan is a loan given to businesses for the exportation of good from the U.S.

5. Franchising Loan is a loan that is specifically for the franchise business owner.

The business loan can be used for a variety of reasons including purchasing real estate to build a company business office or warehouse, construction, renovations, or equipment purchases as well as cash flow for seasonal businesses. Check your local banks and credit unions, even if you do not have an account with them many are willing to look at your financials and discuss giving you a loan on your credit.

Ensuring a Good Outcome with your Business Loan

There are steps your business can take to ensure a good outcome for any loan you apply for on credit. First it is usually wise to define what stage your business is in so you know where to begin looking for your loan. The rule of thumb is that is you are a business start-up you are at Stage one. Businesses with a business plan and product but that haven't made any money yet are said to be at Stage two. Businesses that have an operational and well written business plan and all their programs ready to go are at Stage three. Businesses that have been working and can show income and expenses will be categorized at Stage four. Again the usual lending procedures are that those that are just starting their businesses (stages 1-2) might be better served by finding funding from a less structured source like their friends or relatives.

Other excellent sources for those in the initial stage of business would be state and local government loans, credit unions that offer small business loan incentives, private companies or corporations that invest in the future small businesses. For those businesses that have developed enough to reach stage 3 or who have been actively working their company for some time are guided toward the commercial banks or local personal bank or credit union. If you already have a working relationship with a bank or lending institution this will be the obvious place to at least start your loan search.

It's always important to search for a loan that will fit in with your businesses legal description. Meaning by Corporation, sole proprietorship etc\u2026 If you are a sole proprietorship it might be to your advantage to think about applying and receiving the business credit loan in your company name. There are advantages of doing this as it gives your sole proprietorship a good business name and establishes credit in the name of the company. The benefit to this is that it also reflects on your personal name too if you are able to maintain a good credit history and financial stability. Good credit is an essential ingredient in the loan process.

Just about all lenders except hard money lenders are going to look at you or your company's credit history. This is one of the ways they judge how reliable you and your company will be in paying back any money that is lent to you. Because of that it is always a good idea for any business to keep an eye on their credit report. If you don't want to do this yourself there are companies that will monitor your credit accounts and can keep you informed of the status of your credit and also if there are any inappropriate activity on your credit accounts. If you haven't had your business credit history checked lately, today is a good time to do it. That way you are ready to go ahead and look for that credit loan and can sign up for that business credit card you've been thinking about today.