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Does personal credit affect small business loans?

When you’re considering launching or have already launched a small business and it comes time to get a loan in order to grow, does your personal credit matter, even if your company hasn’t acquired any dings?



Your credit score and your business

Your credit score has a lot to do with how easily you are able to obtain big ticket items, like a vehicle or a house; if your score is too low, you’ll be hard-pressed to come up with the funding necessary to pay for these things. But your personal credit score also affects your business in that lenders are looking to see how financially responsible you are. If you’re making bad choices with your own money, why should they trust you with theirs?

The truth is, lenders are looking at several aspects of your business loan application, and that includes your personal finances. As a new business owner, you don’t have an established line of business credit; therefore lenders look to your financial history to glean as much information on your spending habits and decisions as possible before making a decision.

It’s their job to thoroughly scope out your business and determine whether this investment will be paid back in full and to the agreed upon terms. And as financiers are getting even stricter regarding which business owners they grant loans to, your personal credit needs to be as high as possible.

Supplementing a business loan application

If your credit isn’t where you want it to be, do your best to show the financier that you have a history of positive cash flow. If you’ve started your business as a side job, show the amount of product you sell each month and how you’re able to turn a profit and successfully manage your expenses. Let the financier see your business and experience firsthand what it is that you have to offer. Gather testimonials from loyal customers to speak in your favor.

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These supplements to your application will showcase your financial capabilities and willingness to work through any difficulties you face as a business owner. In order to get a business loan, you have to prove why your business is worthy of this investment and how you plan to repay it. Take the steps necessary to boost your personal credit so that your application rises to the top of the approval list.

Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.



  1. AGBeat

    December 4, 2012 at 12:05 pm

    @bizcash I’ve never turned down a loan, I’m a news organization.

  2. Pingback: Report: Business owners fail to shop for business loans, just take their first option - AGBeat

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