More than one-third of the money loaned to small businesses comes from these nonbank sources. They're often less tight-fisted than banks and may give more weight to intangible factors like your business vision and personal integrity. You'll be in an especially good position to borrow from a nonbank lender if your loan qualifies for SBA backing. The Five C's of Credit Bankers like to speak of the five C's of credit analysisfactors they look at when they evaluate a loan request. When applying to a bank for a loan, be prepared to address these points.
Bankers lend money to borrowers who appear honest and who have a good credit history.
Before you apply for a loan, it makes sense to obtain a copy of your credit report and clean up any problems. This is a prediction of the borrower's ability to repay the loan. For a new business, bankers look at the business plan. For an existing business, bankers consider financial statements and industry trends. Bankers generally want a borrower to pledge an asset which can be sold to pay off the loan if the borrower lacks funds.