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When you apply for a business loan, you may feel like the bank’s approval process is like a black box of secretive decisions. While every lender may have a few unique lending criteria, in general all lenders will take four factors into account when choosing which loans to approve.

Cash Flow
Lenders are going to decide if your business is worthy of a loan based on the inflow and outflow of cash from your business bank account. The bank will want to see a high average daily balance, a significant amount of deposits and a low number of non-sufficient funds occurrences. Using accounting software can be very helpful for providing the lender all this in simple format.

Business History
It can extremely difficult for brand-new businesses to obtain a traditional business loan. This is because lenders like to see a decent track record of business dealings before they make a loan and that requires time. Make sure your business has all its licenses and tax i.d.s in place. Registering with the business credit bureau Dun & Bradstreet is also a smart move to start building a business credit history.

Credit Score
Your business’ record of making timely payments and keeping debt manageable will all be reflected in your business credit score. Lenders use this number to gauge how likely you are to be responsible with their money. If your business does not have much of a credit score, your personal credit score may also be used, so make sure that record is also in order.

Collateral
Finally, have some assets to back the loan is very important to approval. Lenders want something to guarantee they will be able to recoup at least some of their losses if you default. Collateral could be anything from your business real estate, heavy equipment or even accounts receivable in some cases.

By making sure each of these four categories is in order, you can dramatically improve your odds of getting a business loan.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources