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When starting out your business, you will probably ask yourself at some point, â€œhow do I get a business loan?â€ The process of getting a business loan, from start to finish, is a bit complicated, but it is a very essential part of building business credit and having a well-established Paydex credit score.
Business loans before you can get a business loan, you first have to separate your business credit from your personal credit. In order to do this, you will first need to establish an entity for your business. This can be in the form of an LLC or a c-corp, each of which carries with it its own strengths and weaknesses. Limited Liability Companies allow for a great deal of flexibility and solvency, while c-corps are more stable and present the possibility of going public. Either way, as long as your business is distinguished from your sole proprietorship, you will be equally capable of applying for business credit.
You can then register your newly formed business with the IRS, start an account with Dun & Bradstreet and get a file with a business credit reporting bureau. Now, all you need to do is start a few trade lines and you are now building business credit.
Now we can work on the â€œhow do I get a business loanâ€ part. The best place to go is usually to either small bank with whom you have done business in the past, or to get an SBA loan. SBA loans are readily available and can provide you with a wealth of credit, though the trick is usually to apply for multiple small loans and simply count them as one.
If your business is well-established, â€œhow do I get a business loanâ€ has a much quicker and easier answer. Assuming that you have a reasonably high Paydex score, you should have no difficulty getting a loan through a large commercial bank, though you can probably get a better deal somewhere else.