So, You Need A Small Business Loan? Have You Looked At Your Credit Union?

We have applicants all the time that have worked hard after bankruptcy and have their credit score in the high 600's. Some banks won't touch you but we will. We require that you conclude the bankruptcy, wait approximately 6 to 8 months after that to re-establish credit, and show that you're paying your bills absolutely on time after that. This means you can't go on an "all cash" basis because you must establish credit first and it has to show you are meeting your obligations on time. We give you one chance to make a mistake but after that you need to show you learned from the mistake.

Q. Assume I pay my bills religiously on time, but I have high credit card payments. Will this hurt my chances?

A. This has become a very big problem. We have lots of people who pay their bills absolutely on time, but have high credit limits. This is now a factor seriously considered by lenders. The more you have and the higher your limits, the more negatively it is considered. The only problem is that many businesses stay afloat only with their credit cards, and had no other options because the banks are not lending.

Q. What about business financial statements and tax returns?

A. This is definitely required on the larger loans, but not on the small ones. The paperwork is meant to be short and simple so they can be processed quickly.

Q. Do you have to incorporate or form an LLC?

A. Not all. You can be a sole proprietorship. The nature of the business is not one of the factors in making the credit decision.

Q. I have a good credit score and do not want any more enquiries which bring down my score. Is there anything I can do?

A. That is a definite problem. We have to pull your personal credit report it is mandatory. On the other hand, my staff can give you a general idea of your chances if we know your credit score. That way you'll not be disappointed.

Q. Do you find that the vets you deal with like the program?

A. They absolutely love it. For good reason, they have put their lives on the line and they feel entitled to a fair shake in starting or expanding their business. They are grateful there is a program out there for them.

Q. You have any inside suggestions as to how person can increase their chances?

A. Sure: The following really helps: 1) a business plan with financials. Financials are the most important part. But I also tell people that you're not trying to get an "A" on a term paper. Just do a good basic job and trying for a "C+". 2) Tell them exactly what you're going to be spending and on. Just saying that you needed it for cash flow doesn't quite make it. I had a case once where someone had a restaurant and were expanding their kitchen. They had spent weeks shopping around and gave a detailed list of the exact equipment, model numbers, and the pricing. This was very impressive and really helped them obtain a loan. 3) A well written letter accompanying the application that positively describes the market and your future plans. alliedcash.com