Banks & Business Loans

First of all the banks and lending institutions will examine the finances and financial records of any business seeking a loan for business. They will do a business credit check and a search with one of the business credit reporting agencies, like Dun and Bradstreet, to see if the company applying for a loan for business has any blemishes on the business credit file.

As part of this process they will likely request a business's Paydex Score. This is a rating system developed by Dun and Bradstreet to monitor how well a company pays its bills to suppliers, vendors, and other businesses. A high Paydex Score means that a business is a likely candidate to pay its bills on time in the future and improves the chances of getting a loan for business. A low Paydex Score means that the business has had some difficulty meeting these commitments in the recent past and for the banks this is not seen as a good thing and may even affect the ability to get future loans for business.

Banks and credit unions will also check into the creditworthiness and character of the company requesting loans for business by examining the personal finances of the owners and operators of the business. Once again good personal credit ratings and score increase the chances of getting loans for business while poor personal histories will diminish those chances for success.

After the banks have reviewed the credit history of the business and ownership group they will turn their attention to the actual business itself. Before granting loans to business they will examine the business plan and projections for the company and they may even do their own research into the operating environment of the business. At the very least they will want to be convinced that the business is well run and managed and that the prospects for business success are not in doubt before granting loans to that business.

The last thing a bank or other lending institution may do before offering loans to business is to ask the business to provide references from the business community who are willing to speak on their behalf. These can be customers, clients, vendors or supporters and as long they are willing to vouch for the good name of the business they will certainly go a long way to helping secure loans for business.