How to Get a Business Loan With No Personal Credit

A business loan can boost your cash flow and allow you to concentrate on growing your business. However, if you have no personal credit, you may feel that you're out of options. Fortunately, you can take some steps to ensure that you can get a business loan.

Difficulty: Easy

Instructions

1. Build your business credit rating. Lenders will perform a credit check when you apply for a loan. Generally, they'll concentrate more on your business credit history. Expect lenders to look at your business plan to ensure its soundness.

2. Separate your business credit from your personal credit. To do this, you need to request a tax ID number, incorporate your business or create a limited liability company (LLC).

3. Register your company with the IRS and get a business bank account. Apply for at least five business credit accounts with supply companies that offer a small buyer's credit line. Ensure that they report credit histories to the three major credit bureaus.

4. Pay your invoices on time so that you receive a favorable credit rating. Lenders are leery to make loans to businesses with a credit score of 650 or less.

Tips & Warnings

• A social security number is not required to obtain a business credit account. Therefore, you may qualify for a loan even with a negative credit history.
• Exercise patience. Building credit takes time. It won't happen overnight.

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[ibodner]

on 10/8/2008 Be careful! If you personally sign for the loan - it is a personal loan that is used for business reasons. Ultimately, you are not off the hook.

Sincerely,


Ilya Bodner
Small Business Owner
Initial Underwriting