How Lenders Measure Business Credit

How Lenders Measure Business Credit

Numerous entrepreneurs across the country often turn to lending institutions for expansion projects, to purchase new equipment, new office space, for marketing initiatives and technology upgrades. You name it, and businesses most likely need money for it. More and more though, it is getting increasingly difficult for small business owners to obtain funding from some institutions.

Lenders have their own criteria with which they judge your application. Unfortunately, you may not know what it was exactly that got you turned down. Below are five key factors that lenders take into consideration where commercial loan applications are concerned.

1. Your ability to handle debt. Having debt is not a bad thing; however, if you are not timely and diligent about making payments then this will definitely hurt your chances of securing funding. To see where you currently stand, many lenders will want to see your cash flow status as well as your current debt payments.

2. Your personal ability to handle debt. Especially if you're a relatively new business, they will look into your personal credit and debt as well. You are after all the owner and so this will tell them something about your capacity to manage money.

3. _Where is your revenue headed_…Beyond just looking at what your business has done to date, they will also consider the direction of your revenue; in other words, does it seem as though you will be experiencing revenue growth, or does the picture not seem quite so bright.

4. Personal credit. Again, for many loan programs, they will examine you as well as the business. This means pulling your personal credit report, evaluating your scores and assessing how creditworthy you truly are.

5. Business credit. Of course, they will ask to see your business credit report. They want to make sure you're not too big of a risk. The credit report will show them whether or not you're actually trustworthy enough for their loan programs.

At First Union, we make it our job to help small companies who may run into roadblocks with traditional lenders. A bad credit score doesn't necessarily disqualify you. Our flexible and fast funding programs may be just what you need to get your company back on track. Call today!

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