If you have been in business for over two years then you probably have already developed a business relationship with a bank, credit union, or other financial institution. You may already have a business loan or a business line of credit and hopefully you have been making enough money in the business to make your payments on time. In that case getting a new business loan is relatively straight forward.

You will still need to prepare a solid business plan for the bank of lending institution that will include a budget and forecast as well as a very good reason for the bank to provide a new business loan. But since you have been in business for a period of time there is a track record with the bank and through business credit reporting agencies that the bank can access to assess the application. They will also be able to look at your Paydex Score to see how well you have been able to make payments to your suppliers and vendors and assuming everything is in order the bank will likely approve your request for a new business loan.

If however you are just starting out in business you may find that getting a new business loan is one of the strongest challenges in your fledging business career. Banks like to deal with customers who are familiar to them and since your business is a relatively new player in the marketplace they will not have a lot of information to assess your business credit risk. Even the Small Business Administration will not guarantee a start up loan to a new business and this makes it very difficult for any business to borrow the initial funding for a new business.

Most banks and credit unions will want to closely examine the personal finances and personal credit information on any prospective new business loan applicant. If there are previous loan defaults of personal bankruptcies on your personal credit file or if you have a low personal credit rating then it is nearly impossible to get a new business loan. So it’s a good idea to review your personal credit information before you apply for a new business loan to see if you can’t resolve previous problems or at least make sure that the existing information is up to date.

The best way for a business that is just starting up to get a new business loan is to provide a personal guarantee to the bank or credit union along with the request for a loan. This will not only guarantee that the bank will get their money but will also show them that you are serious about being in business and that you are prepared to back this commitment with your own assets. If you do not have the capital or assets to provide this guarantee you can request one from your family or friends so that you can get your new business loan and begin your hopefully long and successful career in business.