Business loans can be defined as money lent for a specified amount of time at a specific interest rate to a specific person or people that operate a business or plan to operate a business. This definition is very broad, but so are the various types of loans available to business people. Deciding on which type of business loan that you and your company will benefit from the most is very important. Often times, a start-up business or someone that has never owned a business will find themselves more or less applying for a “personal” loan. This can be a very risky endeavor, mixing business loans with personal loans, however, often times it is the only available means for first time business owners.
One of the first things personal business owners need to do is establish business credit. Business credit can help you get a business only loan without using your personal credit. Establishing business credit can be done by:
1.) Opening up a business credit card account and paying it in full.
2.) Buying equipment and supplies from companies that will report good standing to the business credit bureaus.
3.) Having a good business plan with potential earnings, letters of intent, and any type of customer contracts already laid out.
All of these types of endeavors can help in receiving a business loan. Often times, financial institutions require in-depth business plans, be prepared to spend days working on just the certification paperwork prior to applying for a business loan. A business only loan can be obtained in the business name without use of personal credit as long as the business can justify the loan amount and the ability to pay it back.