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    7 Replies Latest reply on Aug 11, 2008 11:08 AM by JVCruz

    what sort of personal credit do i need to be loan approved?

    klibra Newbie
      Hi all,

      I am a young entrepreneur entrepreneur in NYC with a great plan for a small retail joint. I have a business plan ready but am wondering what sort of personal credit i need to be approved for a bank loan? Currently, i have a decent credit score as i do pay my bills on time. However, i do have $4,000 in credit debt with very little in savings. Is a bank loan hopeless for me? even if i have a very clear plan?
        • Re: what sort of personal credit do i need to be loan approved?
          LUCKIEST Guide
          Hi and welcome to this web site.

          You are a young entrepreneur in NYC with a great plan for a small retail joint
          If you have a GOOD business and marketing plan, it will go a long way towards a bank loan.
          The Bus Plan is one of the first items a lender or investor will want to see.
          There is MORE. The Bank wants to KNOW THAT THEY WILL GET PAID BACK.
          So you know about SCORE??. SCORE is FREE. No money, but they know what banks are looking for.
          Good luck, LUCKIEST
          • Re: what sort of personal credit do i need to be loan approved?
            BizCreditGuy Newbie

            Short answer. It will be hard. Average scores (all three bureaus) should be at or above 680. That was before the national credit crunch. Also you need collateral, 10-20% cash (e.g., you want $100k from a bank, you should have $10k+ in cash yourself), experience and a friend at the bank. It's not impossible, just know that everyone thinks they have a great plan so you have to beat them in the other areas. Look at www.circlelending.com . They've formalized the informal lending arena and may be able to provide guidance on getting investors and presenting a funding proposal. Also, set-up a corporation or LLC early and begin to establish business credit. Business credit plus good personal credit improves your overall creditworthiness and makes you a better risk. Learn more at www.iwantbusinesscredit.com.
            • Re: what sort of personal credit do i need to be loan approved?
              Milleisen Scout
              KLibra - I live in NYC as well and have worked in lending here and on Long Island for 8 years. As far as a bank giving you a loan based on a business plan and projections, unfortunately that will be an uphill battle. Most entreprenuers have to find alternative means to finance their business due to the high failure rate of small businesses. I've had to turn away potential borrowers with impressive track records in business because they didn't have the assets or income to make it work. Bankers are simple animals.
              If you can satisfy a banker that a) you have a history of honoring your obligations and b)you have sufficient income to repay the debt even if the business fails, you'll be good to go. I know, I know, easier said than done, right? this is why entrepreneuers need to be creative when it comes to getting their hands on startup money. While business plans are a general roadmap, bankers deal in historical fact - ie how much did you make last year, and is it enough to pay my loan along with all your other obligations.

              There seem to be many requests on this forum for angel investors, but the fact is that angel investors don't throw money at every business idea they see. In fact they look at 100 ideas and go with maybe 1. So unless you have a very unique product or service that fills a previously unfilled niche, you will most liklely need to look at less sexy methods like friends and family, credit cards (be careful, credit cards can be like playing with fire, scarecrow), or a peer-to-peer site.

              Oh there is one sure fire way to get the money...be patient and save it yourself. sometimes we forget about that one.
              • Re: what sort of personal credit do i need to be loan approved?
                lalithabrahma Adventurer
                Have you looked into Virginmoney.com
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                • Re: what sort of personal credit do i need to be loan approved?
                  JVCruz Adventurer

                  Hi klibra and best wishes.

                   


                  This may be a little off topic, but here it goes.

                   


                  You may want to find an established business that is similar to your planned store. Incorporate that into your business plan and go from there. Talk to the owner and see if you can work out owner financing. With banks, they are more likely to buy a business that can show cash flow for the last 3 years. You'll have a better chance taking over an established business than starting one.

                   


                  Another thing, have you looked into your family or relatives? Can they support you in this plan? You may be able to get family to finance your business. Show them your business plan and see. If you can't convince them, you'll have a hard time convincing the banks.

                   


                  JV Cruz