Obtaining Your First Bank Business Loan

Your first reporting bank business loan puts you on the lending radar

A blue sign that says getting a secured bank loan is one of the best ways to build business credit scores

Just as soon as other credit providers see a reporting bank loan on your business credit reports it signals to them that your business is for real.

Getting your first business loan from a bank can seem like an impossible task. The majority of the business loan applications at banks get declined because banks won't lend to just anybody ... or will they?



Having a bank loan can provide a powerful boost to building business credit fast. The business bank loan needs to be in the exact name of your company. It should be under your Federal EIN and report to the business credit agencies, specifically Equifax and Experian.



So how do we accomplish this? Under this Bank Loan Program you will be securing a business loan with a certificate of deposit (CD) at the bank that is extending the business loan. You'll make a deposit into a CD account at an SBA preferred lending bank. Then, you receive a business loan for 100% of the value of the CD.


This process is highly effective and guarantees success as long as your personal credit is at least "ok". While the bank does not solely rely on your personal credit for your business loan, they may not approve the deal if your FICO scores fall in the low 500 range. It is advisable to approach smaller business banks and first have a conversation with an individual banker if your scores are low.


Now, where does your deposit come from? The required amount of money is not exorbitant. In fact, you can start with as little as $5,000. There are numerous creative methods to obtain the necessary funds for the bank CD deposit, such as seeking assistance from family, friends, utilizing savings, organizing garage sales, or exploring the various innovative funding programs outlined in the subsequent steps. Please note that the length of the text should not be altered.

Why A Secure Bank Loan?

The Features of a Secured Bank Loan

1. It will appear on your business credit report just like any other loan.

2. There will be no note in your file, or on your business credit reports, that show it as "secured".

3. It will make your business credit report stand out to other lenders and creditors who obviously know how difficult it is to get a business bank loan.

Check your possible UCC filings

Comparable Credit

The Importance Of Comparable Credit Cannot Be Overstated

Comparable credit simply means that someone has already loaned you an amount of money that is close to or "comparable" to what you are now asking another lender to lend to you. This is where the importance of this program comes in.


Let's do a "what if". What if, you borrowed personally say $25,000 from a credit union on a three year installment loan basis? Then, you took that same $25,000 and used it to open a certificate of deposit with a business lending bank which in turn you used to secure a $25,000 reporting business line of credit.


Here is what would happen. Other lenders would see that you had a $25,000 line of credit with a bank that would make your business much more attractive to them and lending offers would start coming in. Now when you want to finance that next $35,000 purchase you already have a reporting "comparable credit" making it much easier to get approved.


There are also two huge upsides. First, most business lending banks will release the certificate of deposit you used as security for the business line of credit after 12 to 18 months of payments being made on time or early. Second, you can then use that released CD money to payoff the credit union loan that will normally give your personal credit scores a big boost.

A Helpful Suggestion

If you need to borrow the necessary funds from friends or family for this step, you can provide them with the assurance that they will be repaid. Here's how it works:


1. You borrow the money to secure a bank loan for the CD.

2. The bank then loans you an equal amount.

3. Deposit the loan into a separate account solely for repaying itself.


Once the final payment is made, you can return their money with interest. Remember, their money is earning interest in a CD. This technique greatly aids in building strong business credit scores and establishing comparable credit.


Not currently able or interested?

If you feel that participating in the Bank Loan Program is premature for you or if you're unable to find a business bank to facilitate the CD program, there's no need to worry. You can still build your business credit without the CD-Secured bank loan; it just expedites the process. You can always return to this program at a later time.

CONTINUE
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