Business Loans - How to Become a Low Risk Investment

Last Updated May 06 2008 11:29:20.

Question: How do you get the money you need for your business?
Answer: Become a low risk investment!

Sounds simple? Well, it is. First, know who your investors are. If you are looking for a small business loan you are most likely going to approach a bank. A bank will look at you and your business and ask, “Is this a good investment for us to loan money?” Then they look at the criteria of determining risk and make a decision. So again, knowing what the bank is looking for is the key to your success. Every bank has their unique system for determining a loan approval. In most instances, you need a good personal credit score, at least two years in business and a business credit profile. For the bank, your risk as an investment is lowered the longer you are in business, the higher your personal credit score is, and the more information you have on your business credit report.

How Personal Credit Affects Business Loan Approval

When applying for credit you will find some banks accept a lower personal credit score than others. The banks have a choice of three Credit Bureaus to purchase your credit report from. Each Credit Bureau will have a different formula to determine your credit score, so you actually have three different personal credit scores. We recently had a client receive a $50,000 unsecured business line of credit after applying on their own at two banks and not receiving an approval. We were able to help this client because her personal credit score with Equifax was a 633, while at Experian, she had a 675. The banks she went to bought the Equifax report and we sent her to a bank that purchased her Experian report. Bottom Line: Having the knowledge of your credit scores from each bureau will help you decide if you can apply for a business line of credit or not.

Find your personal credit report and scores by going to: MYFICO.com

Source: David Gass, President & CEO, Business Credit Services, Inc. Business Credit Services, Inc. specializes in helping businesses build business credit and establish an excellent corporate credit history. Download their free booklet How to Build Business Credit at http://corporatecredit.biz

Original Article Business Loans - How to Become a Low Risk Investment published at http://corporatecredit.biz

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