Business Loan Asked Questions
What is the difference between personal credit rating and business credit profile?
A personal credit score is a reflection of how a person pays off their mortgage, car loans or other personal obligations and is usually shown by a score of 300 to 800. The higher the score, the better . A business credit profile reflects how well the business owner is meeting his financial obligations. Although there is no universal trade credit score, some bureaus note different business behaviors to represent creditworthiness. The three main personal credit bureaus are: Experian, Equifax and Transunion. The three main corporate credit bureaus are: Dunn & Bradstreet, Experian and Equifax.
Can I Get a Business Loan After Bankruptcy?
A bankruptcy in your past doesn't necessarily prevent you from getting a small business loan, but it can make it more difficult. Not all lenders have the same requirements after bankruptcy, but it is unlikely that a borrower will qualify in the first two years. Many lenders will need two years to improve their credit history after liquidating a bankruptcy.
Do I need a business plan to get a loan?
It all depends on the type of loan you are looking for. For example, to qualify for an SBA bank loan, you will need a business plan. While other lenders may not need a formal business plan, they will ask questions about the purpose of the loan, how it could have a positive impact on profitability, etc. can explain why you are looking for a loan and the benefits you expect.
What is a personal guarantee on a small business loan?
It is common for lenders to require a personal guarantee from the business owner (s) to protect the lender in the event of a business default on the loan. Lenders do this to mitigate the risk of a small business loan, and collateral is often a requirement of the lender before offering a loan.
In the event of default, a personal guarantee gives the lender additional options to collect the debt. This requirement is sometimes waived for businesses with more than five years of business and a good business credit rating.