While the general principles are the same, business loan application is a much more complicated process than personal loan application. In general, the idea doesn't change between the two of them: a personal loan application requires a good line of credit, and you'll be able to secure a better loan (and better interest rates) if you're willing to put some real estate down as collateral. A business loan application works the same way; your business will have to have a good credit score in order to get a good deal, and taking out a smaller loan like corporate credit or putting down a secured loan through real estate will help your chances.
There are several things to consider in a business loan application, however, that you wouldn't have to consider while taking out a personal loan. One is the exact entity of your business. Are you taking out this money as a business, or as an owner of a business? This may sound the same, but to a lender, it's completely different. A business loan application can take two forms here: a loan to a business or a loan to an individual who's in business. The difference isn't the business; it's who takes out the loan.
If you're running a private business or a partnership, your business is connected to you personally. That means that you're a person doing business, and the law (and lenders) will treat you as such. All business goes through you, as the person in charge. If your business is a separate entity, however, then you're not the person in charge. Your business, treated as its own entity, becomes the "person" in charge in that case. Your business is the one looking for a loan, and you're just the human representative. In either case, you're going to have to provide your lender a credit history. It'll be more complex in a business loan application, however, because you're going to have to provide them with a lot more details than a simple credit score.
Starting up your business as a corporation makes things a hassle - but it's definitely a worthwhile hassle. Having your business separated from you can free you personally from the risks your company takes, and it can free your business from your credit history. That means that if you've got a bad credit score, you may be able to start afresh by establishing your business as a corporation, and thus a separate legal personality. That does mean, however, that you're going to have to start from the ground up in establishing your business's credit score.
In order to do that, you'll first have to make sure you've properly established your business as a corporation, with an Employer ID Number (EIN) to associate your company with. This number - your EIN - functions as your company's Social Security Number, allowing lenders and creditors to know exactly who they're talking about, and register your line of credit.
Another thing you'll have to do is to start establishing credit with someone. You'll usually want to set up at least three accounts with different credit card companies, simply so you'll have a lot of people to testify to your trustworthy credit. In order to get this kind of help, you'll need to make sure your credit card companies are willing to report to your potential lender - and of course, you'll need to make sure you're paying your credit card bills on time. Also, many credit card companies will only loan to personal accounts: someone with a SSN. Make sure your credit card companies are distinguishing your business from yourself, or you'll end up with your own personal credit score coming back to haunt you again.
Corporate Credit Concepts specializes in "KEY PHRASE". For more information about "KEY PHRASE" and how it might benefit your business, please CLICK HERE for a free phone consultation.