What you'll see on a business credit application

A business credit application is sometimes overwhelming. It might be simple, on the computer or a one sheet mail in form at first, but that is usually a first step. Once you have completed that, it can be a rather large stack of papers. In fact, most people get a little overwhelmed with business credit applications because they are often large and tedious.

A standard business credit application is not like a credit application you fill out for a personal credit card, or something like that. It is not usually small. In fact, a business credit application often calls for you to complete more documentation than you fill out when you apply for a home loan. It can be very extensive, and that is part of why it is so overwhelming.

However, if you know what is on a business credit application, and take it one page at a time, it will not be nearly as big of a deal. You should expect a lender to ask for anything and everything about your business. This is expected because to give you a loan, it is responsible for them to know everything about you and your company. When you get business credit it is not like personal. It is more distant, and often times that results in people not feeling as responsible for paying loans back because they did not borrow the money, the business did. So, to lessen their risk, lenders require lots of info.

This information also helps the lender to determine which type of loan best suits your businesses needs and what kind repayment terms for your loan your company can handle.

It is important to spend time being prepared for a business credit application. To make the process go smoothly, and to be quick, you need to gather your financial documentation for the last 2 or 3 years that show your cash flow, annual sales or revenue, and proof of your business existence (meaning licenses, tax ID, and more). You will need to have a business plan, and projections for sales, finances, and more. The more research you do, the more prepared you are, the better chance you have for getting a loan.

A business credit application will ask how you plan to utilize the funds you are borrowing, so you better have a good answer. That can be for growth and expansion of the company, payroll, inventory, or even purchasing necessary supplies for your business, many times it does not matter as much what you are spending it on as it does that you know what it is, and that the purchase is necessary for the continuation and growth of your business.

Your business credit application will also ask about your personal financial information. Your lender will want to see how credit worth you are, and how responsible you are with your loans in your personal finances. Your personal credit track record tells lenders a lot about your worthiness for loans. Timely payments to your lender will go a long way on a business credit application, so make sure you pay on time for at least a year before seeking business loans.

Be prepared to complete the business credit application and it won't seem so hard.