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Can you share how to go about obtaining a loan for a business? Thank you.

Can you share how to go about obtaining a loan for a business?

Thank you.

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Since you reside in the United States, I suspect the bank will impose the following requirements to obtain a loan:

  1. Completion of a Credit Application with a minimum credit score of 650. A score of 680 or higher is preferred.
  2. Two (2) years of personal tax returns filed with the IRS
  3. Business Plan
  4. Three (3) years of projected financial statements (Balance Sheet and Income Statement). Income Statement must be broken out by months.

If you need additional help, I would suggest you submit a request for a SCORE Mentor. You can do this from their main website: www.score.org Enlisting someone from SCORE will help with both the Business Plan and Financial Plan (projected financial statements).

A final word of caution. When you take out a loan you have to make fixed monthly payments. This requires that your business acquire customers and generate sales very quickly. The bank will most likely make you sign a personal guarantee. This means if you default on loan payments, the bank can place a lien against your personal assets (house, car, investment account) to satisfy repayment of the loan. It is usually not a good idea to take on debt (loans) when you start a business unless you are very sure that you can get customers and make strong sales on a recurring basis to meet the loan payments.

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