Improve Your Chances Of Getting A Business Loan

Is your money shrinking and you feel like you need a business loan? Too many people feel the pressure of throwing together a loan package quickly. These are three identifiable and proven ways to improve your chances of getting a business loan.

Apply for a business Loan with your Business Name Instead of Your Given Name: For instance, use your business loan, "Sarah's Block Company" versus your given name - "Sara Smart." The reason you need to apply for a business loan in your business name is because it is a business loan - Not a personal loan. The banks and loan institutions are more than happy to help your business with a business loan, but they shy away from making a business loan to a person. Having a business that is a corporation or LLC improves your rate of success - For example, an S-Corp, C-Corp, or LLC.

Sole Proprietors have difficulty as business owners getting a business loan because they lack the same credibility of being identified as a 'business' that goes with a business formed as a corporation - A business that is complete with By-Laws, tax ID number and business bank account. A business portrays the 'image' of success better than a person does. It's because of that, that lending institutions work better for those business people. As a sole proprietor, a person 'appears' to be acting in their own interests as an individual-instead of a business. Loans to sole proprietors are rated on the personal credit history and not a separate business history for the credit reporting agencies. That doesn't look good to loaning institutions.

Even Corporations can mix up personal and business debt. It's an easy trap to get caught in. Let's say that you own a construction company and you get a construction loan to develop a piece of property, but use that money to make repairs on your personal home. Although there are multiple ways to justify this, the financial company won't see it that way. Neither will the IRS agent at tax time. And there is a double penalty for doing this too - If you are audited and have mixed your expenses the IRS may choose to 'dis-allow' ALL your business expenses. You can see quickly that this could become the stuff people describe as, "the stuff that hits the fan."

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