A recent survey demonstrated that nearly 2 in 3 small business owners sought loans for their businesses in 2021. However, small business owners should have advance notice of what lenders are looking for from potential borrowers in 2022. This article gets at some of the characteristics lenders will ask borrowers who wish to secure financing for their businesses.
1. Business Credit
Business Credit should never be ignored – that is, generating business credit can be a difference maker when accessing secured or unsecured financing. Simply, business credit is how successful a business is in paying its bills which are linked to the business’s Employee Identification Number, not the owners Social Security Number.
If you are not sure if you have business credit, you can use a tool like NAV.com for free to see if you have any current business credit.
Some companies have programs where you can build your business credit. BRP Onesta has an affordable program where business owners can access and build their business credit with hundreds of different tradelines (Click Here to Access).
2. Time in Business
Time is business is very important for small business owners as lenders traditionally want to lend to businesses that have history versus a startup. The longer the time in business, the likelier it is that the business will continue to be in business therefore increasing the changes the loan will be paid back.
Lenders prefer a track record of successfully servicing previous loans and history of running a business. This makes it more difficult for new businesses to get funding as lenders are less likely to take the risk of lending to new businesses, especially those in business less than 2 years.
3. Business Borrowing History