What Credit Do You Need To Start Your Business

Applying for commercial credit can be tedious. It calls for more documentation than you might initially have expected and certainly a lot more than when you apply for consumer credit. For lenders, extending credit to an entrepreneur usually means customizing the loan to suit the credit needs of that business. So don’t be disheartened by the amount of paperwork needed to accompany the application. Instead, be more prepared.

With this blog resource, The Corporate Company marries the need to get you best aligned with your organizational structure that best suits your corporate needs and that does not exclude preparing you to best answer, honestly, your credit needs and identify your sources to meet those needs.

Among the best assets you can bring to the lender is a well though-out and documented business proposal. Listen, you will need a plan and that plan cannot only make sense to you but instead it must make logical business sense to all those that will come to hear it. Take this additional note, assume and rather expect, that all those who will see your proposal won’t even be in the same room with you so all they will have is black and white paper with your dreams and hopes typed and graphed out…thats it. This isn’t the time to “go for the gusto”, but rather, put together a sensible plan of repayment. Remember, no one is interested for the most part in your dreams and your hopes, but instead, they are interested in how well and how fast you can repay their investment.

With the state of our economy being what it is these days, its not so much about getting a loan from a bank, let me be honest, no one is lending money the way they formerly did. Don’t take it personal, this is business. Instead, figure out a new way. This is your dream, your passion, figure it out like the world depends on it. You’ll be suprised what you come up with in such a short period of time.

You should lay out a business description: What’s that? It simply tells the nature of the business, describes the product and the services rendered and its market as well as identifies its ustomers and competition. The best advice I ever heard came from the owner of the Miami Dolphins, Wayne Huizenga, regarding the methods and principles he used to build his empire, Republic Industries; “become the authority in the area of business you operate in”.
In other words, know and learn all that you can regarding that thing you want others to invest in. They will ask you questions and you better be able to answer them.

I’m going to go out on a limb and just say it…”Business Plans are stupid!” No one will read it, no one will lend you the money you’re looking for without sufficient collateral anyway…sorry to be so blunt, but the plan is for you…not the lender. With that said, the plan outlines your corporate strategy for the next three to five years; it will aid you and the lender in detemining whether the business will generate the cash flow needed to repay the loan.

Also, have a repayment plan! This is the most vital piece of all the short term goals. This tells how you propose the repay the loans or outlines a repayment schedule. The lender will be expecting you to repay the borrowed funds from the profits produced by the business. As a contingency, you might need to develop a plan on how you would repay the loan if the profits alone turned out to be inadequate….in other words, have a Plan B, documented, in the event your success comes slower than you first hoped.

Keep in mind, you can’t just make this stuff up…You’re going to need Supporting Documentation as well. This is where my folks reappear because certificates and articles of incorporation, partnership agreements (all housed and kept on record at The Corporate Company), letters of references, contracts (to verify business agreements in the works or underway), invoices or vendor quotes.

This portion probably should’ve been listed first. There is no loan for you personally or professionally if there is no collateral for the loan. You will need it to secure the payment of the loan. This could include business assets, personal assets…anything of value that you own that you can borrow against.

The need for financing is a critical an perennial concern for the owners of small businesses. Few things are as crucial to the health of a small business operton. Many small businesses are launched by the personal resourcces of their owners. But they can quickly reach the stage where the owner must look to the credit market for financial help in expanding operations. The banking industry is a customized process for your application for commercial credit.
The next blog will focus more on what to do if you are not approved for a loan. I hit on a few things here, but more specifically, I want to discuss the rejection process.

We take “incorporating your dreams” literally so you should too.