Do I need a business plan to get a loan? Why do I need a business plan to get a loan?
If you are seeking a loan through a bank or the SBA, you will need a business plan. Many lenders require a plan as part of their loan application package. Your business plan is essential because it gives an outline of your business and a picture of your financial situation that should indicate to the lender that you will be able to repay the loan. A business plan submitted to secure financing should also explain what you plan to do with the funds, so that your lender will know where their money is going.
Why do I need to submit personal credit information for a business loan?
If your business has a long and strong credit history, you may not need to include your personal credit information when applying for a loan, but for most small businesses your personal credit will be a significant component of your application. Your credit information shows lenders your willingness and ability to manage your debt and repay your loans. Lenders need to know what kind of a person you are if they are going to trust you with financing. For big banks especially, who don’t have the impetus to develop a personal relationship with you, your personal credit history is the easiest way for them to judge your character.
Ked Harley is a writer and researcher for Biz2Credit, a leading credit marketplace connecting small- and medium-sized businesses with small business loans, service providers, and complementary business tools. She is also a self-confessed coffee addict working out of New York City. Her interests include business and finance, world news, food, and travel, and she enjoys yoga and running in the park