Let’s face it, landing a business loan for a small company isn’t easy.
To many of us, it seems like banks are slow to grant a loan when we need it most, but are very willing to lend us money when we don’t need it quite so badly.
We've got to remember that banks are in the business of earning interest from loans, and the definition of success for lenders takes into account the inevitable minority of loans that don’t get repaid. In these cases, the bank not only loses out on the interest but often loses the principal as well. In order for banks to stay in business, they need to closely manage their percentage of unsuccessful loans. For that reason, it’s understandable why banks are so methodical when it comes to lending money!
So the lending process is tough, that's a given, but it's also a system that has been the catalyst for many small businesses. In fact, some entrepreneurs would say that their relationship with their banker has been the pivotal ingredient to growth.
To determine whether a bank loan is the right source of funding for you, first recognize that banks generally like to do business with companies that have a track record, rather than pure startups. At a minimum, banks generally like to see two years of existence and the corresponding tax returns. Further, banks expect your credit for the business to reflect a pattern of timely payments, and that you have good personal credit.
Copyright 2009 StartupNation, LLC
Click here to read more from StartupNation