Getting a bank loan in the name of your business that reports to the business credit agencies is invaluable for building business credit and finding larger and less expensive financing in the future. It may seem like an impossible task since banks have very tight lending criteria, but there is a little trick to getting a loan from a bank.
Your best bet is to try an SBA backed bank. Banks that are working with the SBA have a certain percentage of their loans guaranteed by the government. Their lending criteria is a bit looser since they do have that security in case a loan defaults.
You can go on the SBA website to find a local bank in your area. Once you find a few, you will want to find one that will give you a loan in the name of your business secured by a certificate of deposit (CD) of the same amount. It may look something like this:
• Business owner borrows money from a friend to get a CD to secure the bank loan.
• The bank makes a loan dollar for dollar based on the CD amount.
• The day the loan funds the owner can repay the loan 100%, or they can separately deposit the money from the loan/line of credit and use that exclusively to pay back the loan.
This technique gives a large push towards building business credit and is just one of many techniques. Learn more at BusinessFinance.com
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