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5 Replies Last post: Nov 2, 2008 9:21 PM by cisaac

How much does personal credit influence business loans?

Nov 1, 2008 6:02 AM

Click to view thebabybloak's profile Start-up thebabybloak 2 posts since
Oct 31, 2008
My husband and I have bad credit, but we have a viable business we have been funding out of pocket. We're doing as much as we can, but to make it grow we need a business loan. Is it stupid to think with a good business plan and numbers, I could get a loan?
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Click to view NoBullFunding's profile Mogul NoBullFunding 278 posts since
Oct 6, 2008
1. Re: How much does personal credit influence business loans? Nov 2, 2008 12:10 PM
It depends how bad your credit is. If you are a startup with just a "good idea", then it will be very hard to get a loan with serious credit issues. Have you attempted to rectify the issues that have hurt your credit?
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Click to view CapitalCoach's profile Mogul CapitalCoach 20 posts since
Feb 16, 2008
2. Re: How much does personal credit influence business loans? Nov 2, 2008 12:10 PM

Lenders are interested in 2 key factors:

1. Ability to repay the loan. Where will the money come from to make the payments (profits)

2. Assets that will encourage the borrower to repay the loan.

Generally, for small / new businesses - lenders will want to know more about the owners and thus will likely examine their credit history.


Generally, a good business plan with great numbers by itself isn't enough to get a loan - although it is an essential part of the process. Consider building a "package" that reduces the perceived risk for the lender.

I don't think that a bank is your probable source at this time - so you should approach some of the more "flexible" sources of funds.

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Click to view CapitalCoach's profile Mogul CapitalCoach 20 posts since
Feb 16, 2008
3. Re: How much does personal credit influence business loans? Nov 2, 2008 3:00 PM
Lenders are typically interested in two things -

1. The ability to repay (profits, personal income, etc)
2. Assets that when pledged will "encourage" the borrower to repay.

With a new business, generally the lender will at least look at the credit history of the owner(s).

There are a number of ways to bring capital into a business - but generally it takes more than just a good business plan to be Capital Ready and attractive to the provider of the capital.
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Click to view thebabybloak's profile Start-up thebabybloak 2 posts since
Oct 31, 2008
4. Re: How much does personal credit influence business loans? Nov 2, 2008 8:05 PM
in response to: CapitalCoach
what would you consider a flexible source?
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Click to view cisaac's profile Professional cisaac 5 posts since
Oct 30, 2008
5. Re: How much does personal credit influence business loans? Nov 3, 2008 12:11 AM
in response to: thebabybloak
Try other non-traditional methods. Your state's small business department of development should have loan programs or maybe some community focused loan programs. They tend to be a little more lenient on credit (especially since you've been operating the business and have real numbers to show).
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