Business Loan Criteria – How You Can Successfully Acquire a Business Loan

Strategy Plan One

February 23, 2012 

 

Business Loan CriteriaBusiness Loan Criteria

You have almost finished off a detailed business plan and now need to approach lending and funding agencies for possible sources for your business start-up or expansion.

You know that in your financing picture you will need a commercial loan and you know the financial institute will have business loan criteria.

 

There are some key lending criteria you must be aware of when you are applying for a commercial loan.  To be prepared, here are some of the business loan criteria a lender may have:Business Loan Criteria

  • Your personal and business’ financial history, including loans history
  • Your credit score
  • Your personal and business financial positions, and financial statements including balance sheets (assets & liabilities)
  • Collateral and loan security – what assets can be used as collateral or to secure the loan?

The financial institution may also analyze a detailed business plan with respect to the additional business loan criteria:

  • Projected revenues and expenditures – are they realistic, achievable, measurable, and backed by objective information and assumptions?
  • Profitability and other financial trends and indicators
  • Ability to repay the loan based on business revenue and owner’s draws
  • Strong financial controls, procedures and dedicated staff
  • Key financial personnel, including accountants and bookkeepers
  • Business and corporate structures and governance (ie: is there a strong Board of Directors in place or planned?)
  • Operational procedures and track record of operational and financial performance
  • Duration, value, type and use of the loan funds (ie: is it an operational loan, or for the sole purpose of acquiring an asset for operations, or is the loan for the complete start-up costs?
  • Financing mix (ie: personal or business equity investment plus any other sources)

 

As you can see, lending and business development agencies will analyze you and your business’ capabilities when making a decision on a loan, based on business loan criteria.

 

Sometimes you may get declined, and if that is the case, don’t give up.  Rejections mean you must work a bit more to meet criteria.  If you are successful, then you are on your way to business implementation.  Don’t take implementation lightly – every day that goes by, interest is charged on that loan.  Strong and quick implementation will help you achieve the break even point fast and may give you the ability to repay the loan faster.

 

 

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One

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