Keith Gilabert, "How to Obtain a Business Loan"
by keithgilabert, Window Shopper
- Created: April 11, 2014, 11:09 am
First you need to create a business profile with Duns and Bradstreet and give them a minimum of 4 business references, this will create a credibility report with an estimated line of credit which all lenders require. Banks will also review your ability to pay which is commonly known as the “5 Cs” to determine if your business is credit worthy: Capacity: Do you have adequate working capital to cover your short-term obligations? Typically they want to see 6 months of working capital, which includes rent and payroll. Character: Will you pay your obligations? This is where business credibility and business credit has a large impact on loan approval. Your past business references are key for this. Collateral: What assets or guarantees can you provide to collateralize the debt? Try not to use your home or automobile as collateral, use business equipment or even better receivables. Capital: How much additional equity or financial risk will you have in the company once it is financed? Typically a bank wants to see 30% investment from the business owner. Conditions: What are the loan proceeds to be used for? Usually a bank will loan money in order to make more money. You cannot ask for a loan to stay in business, it needs to be for a project to finish with a higher appraised value. If you have any questions, please post below. Thanks, Keith Gilabert
‹ I am starting an online fashion apparel boutique and I have too many questions about credit and where do I start? When Do you start paying back a loan ›
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