Criteria That Small Business Lenders Use

2007-03-08 10:33:40

( Business )



Selecting a number of potential small business lenders to help finance your business is not a difficult process. There is an array of different small business lenders to choose from, and can include:

Your local bank with whom you have a long-term baking relationship with. Your bank has a history of your financial background, and can extend assistance. It should however be noted that banks will only grant loans if you have a positive financial history.

A credit union is another place where you can get small business loans. Credit unions are smaller establishments and provides you the opportunity to speak to the owner directly. A small business loan approval can therefore be obtained instantly.

There are also independent financial institutions that grant small business loans. These types of small business lenders can be easily found on the Internet, newspaper or the yellow pages.

A certain government body can also assist you with looking for small business lenders. This institution can even guarantee a small business loan for you.

Small business lenders use certain criteria when considering your application. Similar to people, companies also have credit histories. Sometimes personal credit histories of proprietors and directors are also checked and used as one of the determining factors of a loan.

Small business lenders also check to see if the company owns any real estate. In most cases, business that use properties as collateral have higher chances of a loan approval. Providing collateral ensures small business lenders of guaranteed repayment in the event a business has financial problems in the future. This is because the collateral an be taken away in the event of non-repayment of the loan.

Lastly, small business lenders will conduct a background check in the company’s character. A company’s character pertains to its corporate image, plans for the future and past performance.

Once your small business loan is approved, ensure that certain services that come with the provision loan are provided.


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