If you are running a new business you may find it difficult to get a business loan. Sometimes even businesses that have been in business for a long time might have trouble getting small business loans if they haven’t taken the effort to build their business credit. So what are the qualifications to get a good, low interest loan?
Business Credit Score: You may not realize this but your business has (or should have) a credit score. This score is completely separate from your personal credit score, and just like your personal score you must build it carefully over time. To do this your company must purchase items on credit, or borrow money and pay off these debts under the agreed upon terms. Your score has a large impact on the likelihood you will get a loan, and the quality of the loan you get.
Business Revenue: The revenue you bring in has a large impact on the type and size of loan you can obtain. It is a strong indicator of your ability to pay back the loan and how much you are able to pay back. Most banks want at least 10 years of revenue records to get a sense of your average revenue, your rate of growth or shrinkage, etc.
Years in Business: The bank doesn’t want to give small business loans to fly by night companies. They need to feel secure that you are a real company with staying power to stay in business as long as it will take to pay back the loan. These are the big factors that effect your ability to get a loan for your small business or not.