Bank Loans Make certain any bank you approach really does care about supporting growing businesses. One way to do that is to find out whether it's a certified Small Business Administration lender-even if you're not in the market for an SBA loan. Most small business loans are secured with company or personal assets. Lenders will usually ask for personal guarantees, as well as collateral from anyone who owns more than 20 percent of the company. The bank's intent by requiring all this is, in part, to gauge whether you think your company is worth the risk you are asking them to take.
Business loans have more strict requirements than consumer loans.
For example, if your business is in tough financial times, your bank may ask you to immediately pay off the full amount of the loan, something that is unlikely to happen with a consumer loan. Consumer Loans Lots of small businesses are funded through personal loans or other loans based on personal assets. Some banks don't mind if you take a consumer loan and use the funds for business purposes, others will refuse to lend to you if you tell them you need the money for business purposes. Keep in mind that if you tell a banker a loan is for personal use and you use it for business, that lie constitutes an act of fraud. Consumer loans require less paperwork than commercial loans, and the approval process is much quicker.