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Once all your application is submitted. A loan committee will review your
application and supporting documents, and decide whether or not to approve your
loan. They will apply the traditional test of the four "Cs" of
creditworthiness: character, capacity, capital and collateral.
If you have a low credit score, your application will likely get rejected
immediately, because you have shown a previous history of using credit
poorly. It's also possible that you have no credit history at all, this doesn't
help your credit score either. Always pay your bills on time, even if its
just the minimum required.
Your previous work experience will allow the lender to decide if you are even
qualified to run your venture. Do you have enough short term funds to make
your payments in a timely fashion, if not, you may not pass the capital test.
Can you draw on your assets if all else fails. Can you sell your car or
your house to repay a defaulted loan?
If have trouble getting approved for a credit card, you'll have a lot of
trouble getting a small business loan. If you have no trouble getting a
home loan of $250k, you will have a better chance of getting a small business
loan.
Don't be discouraged if you aren't the perfect candidate. There are
other options like franchisor financing, or applying with a business partner with good credit.
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