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In today’s challenging economic times, getting a business loan that is right for your needs is never an easy task. It is quite different from getting a personal loan for, say, a house or a car, in that it requires a multi-step process and can be much more taxing. However, the rewards of such a system can be immense; business loans can provide you with a much greater amount of financing than a personal loan, and oftentimes at comparable rates.

Getting a business loan starts with the legal formation of a business. You will need to form a business under the name of either a Limited Liability Company or a C-Corp (check with your legal advisor and colleagues to decide which of those options is best for your situation). The business will have to be registered with the IRS so that you can pay taxes on the business, rather than through your own person. The business then needs to be registered with Dun & Bradstreet or Experian so that a credit profile can be started. This completes the process of the creation of a business credit profile, which is the most important first step to starting a proper business; it insulates your personal credit from your business credit, thus protecting your personal property, and making you eligible for business loans.

You can then proceed on to building your business credit. You will want to start by setting up some merchant trade lines and getting some small business credit cards. Although business credit is largely based on long-term profitability, it can be partially built by simply getting your bills paid on time, much like personal credit.

When it then comes to getting a business loan, you will need a sound business proposal. The business proposal should detail the mechanics of your business, the financial holdings of the members, the plans for long-term profitability, and a detailed analysis of the market. The proposal should demonstrate succinctly that the model you are following will guarantee the a safe return on the banker’s investment.

Though the process may sound daunting, it is incredibly rewarding; it is simply a matter of following a tried-and-true procedure and getting the results that you want.


This Business article was written by Mark Karavan on 2/2/2010