Factors to Consider when Seeking a Bank Loan

Small business owners are scrambling to find ways to finance their businesses. When they approach their banks, often times they cannot qualify for the loan they need. This is due to a varied list of reasons, from not having enough collateral to debt-to-income ratios.

One major factor that is often overlooked, and in many instances, it is not explained to the business owner, is this...If your small business is less than two (2) years in operations, the banks cannot finance you. It does not matter how successful your business has been, they cannot touch you. You must have the required number of years for the banks to even consider your request much less approve your loan.

This is a vital piece of information to know before any small business owner attempts to access financing through the banking sector. It is not that they do not want to finance you. Regulations in place stipulate that a business must be in operation at least 24 months or more. The small business owner must also show that they can facilitate the repayment of said loan without creating a major strain on the business.

During this time, you might be able to qualify for a personal line of credit or a secured loan, but this will not be based on your business. Remember, you have been in business less than 2 years. You would qualify for that line of credit or other secured loan based on your personal situations. I cannot say it any more clearly, you must been in business less than 2 years.

Again, this is all based on if you have all the bank requires. So know what bankers and other financing sources require before you apply for a business loan.

---Karlene Sinclair-Robinson
Author of The Small Business Owner's Guide To Alternative Funding