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Monday, December 24, 2007

Securing Business Credit For Your Startup Business

By Tl Kleban

One of the most important aspects of running a successful business is securing the finances to run it properly. This involves obtaining loans which has become easier now than in years past thanks to the ample funds and financial resources available in the market. As a business owner we can choose to get loans from either private banks to government institutions. It's this change of attitude by bank which has made acquiring loans easier. It's still not all fun and games, however.

The thing is for these banks to take you seriously as an entrepreneur, you need to separate your personal finances from your business life. They look at your business activity as they would a typical consumer for credit purposes, and will turn you down if your personal credit score is low.

A recent study showed that almost 74% of bankers say financial documentation is the most important aspect when they go to approve a small-business loan, and that 60% of those small businesses are turned down because of poor documentation. Here are some other steps you can take to ensure you are approved for that business loan:

Before you go to your bank asking for a loan, you better be sure that your account is in good standing with them. Think of this as an unwritten assurance which could help you increase your chances of getting that loan.

Do you have enough assets to pledge for your credit. This would consists of items like a house, car or a business premise. All of these items represent your ability to repay the loan back.

Many credit professionals recommend building a good credit score and personal credibility through paying taxes and maintaining all legal documents right from the beginning of the business venture. All lenders like to see both when making a decision on a loan.

Are your sources of past credit correctly reporting your credit and payment history to the chief credit reporting bureaus of your state? If they are not, then you may be in a little bit of trouble.

Keep a file of all business documents you have. They need to be complete and comprehensive. This includes licenses, permits, telephone listing, business name, domain name, investment details and spent capital. These act as an indication of the credibility of your business and you, the proprietor of it.

Another good idea is to try and invest a significant amount in the business before you apply for that credit or loan. Doing so gives the bank the impression you are willing to work hard to reach your business goals. This makes them more comfortable approving you for a loan since you will be more apt to pay the loan back.

What is the profitability of the business? You'll find that banks and other lending institutions will only offer loans to entities more likely to earn back the investment. This happens more often when profit realizations are expected to take a long time.

Visit a few small banks in your area to ask for financing. Bigger banks expect great credit history, collateral, hard cash and also personal credibility before they will offer any loan out to a business, making them difficult to deal with. Smaller banks are easier to work with and why most experts recommend them.

Merit Capital Advance looks at the big picture by offering a financing program that provides small businesses with fast business cash. It is the most convenient way to get a small business cash advance when you need it most. Visit Merit Capital Advance at

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Cathy Harris is an Empowerment and Motivational Speaker, Non-GMO Health and Wellness Expert, Self-Publishing and Business Coach.