Ahead of happening April 30 – May 5, Alliance Bank of Arizona is sharing valuable tips for businesses looking to secure their first loan, which is the initial step for many entrepreneurs who realize it’s time for their business to grow and expand.
According to the U.S. Small Business Administration, small businesses across the country create two out of every three new jobs for Americans. As the go-to business banking resource, Alliance Bank of Arizona serves businesses across the state through its nine offices in greater Phoenix, Tucson and Flagstaff and is a valued partner in helping some of Phoenix’s favorite local businesses flourish.
Sherri Slayton, executive vice president at Alliance Bank of Arizona, specializes in small business banking and has the following tips to help first-timers understand the critical factors and common oversights when it comes to obtaining a small business loan.
- Know Your Credit Score & The Credit Profiles Of Your Business Partners – This may seem inherent, but personal credit profiles are integral to any type of business credit request. Be sure that your own personal credit is in good standing and have open conversations with any business partners about their credit. The personal credit profile of all partners involved is evaluated when being considered for a small business loan or line of credit.
- Implications From The Foreclosure Crisis Are Timing Out – Arizona was hit hard by the Great Recession, but negative credit implications such as home foreclosures and short sales started falling off credit reports in about 2015. Some people don’t realize that under the Fair Credit Reporting Act, a consumer reporting agency may not report negative information that is more than seven years old. This means that credit delinquencies, such as foreclosures, don’t permanently impact your credit score.
- Don’t Be Tempted By Overly AggressiveTax Deductions – Many business owners are tempted to maximize tax deductions for their business to minimize reportable income. However, it’s incredibly important to appropriately report your income. That is ultimately what is used to determine if you can re-pay a loan.
- Start-Ups May Find Securing Loans Challenging – Most banks prefer a business to be operating for a few years before they consider them for a loan. That means start-ups, or brand new businesses typically need to secure loans from sources other than a traditional bank.
- Cash Businesses Are Under a Microscope – If your small business typically handles cash, now more than ever, banks want to understand where your cash originates from and how funds flow. This is becoming a growing area of focus within the banking regulatory environment to prevent money laundering. Be prepared to provide very detailed information about how your money is handled.
In addition to small business loans, Alliance Bank of Arizona also offers business credit cards, designed to provide a revolving line of credit, upon credit approval. Business credit cards are an increasingly popular tool for business owners to not only separate business expenses, but to cover unforeseen business costs that may not warrant a traditional small business loan.
