As small business owners know, chances of getting a bank loan these days are slim. Banks are rejecting as many as 90 percent of all small business applications. Is there a way to beat the odds? Lena Gjonaj says the best way to position yourself for financing is to avoid the mistake virtually all entrepreneurs make: starting a business with personal credit.
Everyone's heard a story of a successful startup that was financed with personal credit cards or a second mortgage. But today when those business owners want to expand, they can be in for a shock at the bank, says Gjonaj, a business funding consultant in Easton, Conn. Even if sales are rocketing, a business owner who hasn't taken the steps to establish business credit will likely find out that she's not in compliance with lender requirements.Loan officers look for proof of business credit
One bank Gjonaj spoke with recently had denied a loan to a company that had plenty of customers but hadn't documented a corporate credit profile. "They couldn't prove any good corporateRead More »from Beat small biz bank loan odds: don’t commingle your credit