Here are the things that every lender considers before they even think about loaning you money for your business:

How Soon Can You Pay Them Back?
Investors love to see several sources of income--money coming from your business and a back-up source--usually some form of collateral. They will also look extensively into your financial statements, as well as any previous partnerships. They will ask to see your:
  • Tax returns
  • Assets and liabilities
  • Accounts receivable and payable
  • Profit and loss statements
  • Balance sheets

If your business has brought in a pretty penny, you’re probably going to get approved right away. But, if you have struggled to keep in the black, you can help your cause by including extensive information about potential opportunities, newly acquired contracts, or other positives that shows you’re not a risk.

The majority of lenders ask for proof of collateral. Proof is required if you’re applying for SBA loans, even though it’s not really a deciding factor if you don’t have any in the first place. If you need to pay for necessary equipment and materials with loaned money, you can point out that these can be used as collateral for your loan.

Your Credit History
The current state of your business and personal credit history is the one thing that lenders take to heart. Your credit report is judged by its credit score. You should order a copy of your credit report from the three reporting agencies: Equifax, Experian, and Transunion. Look at them very carefully for any red flags, and get rid of anything that looks bad before you start the loan application process.

Your credit history is attached to your social security number, but business credit history is associated with your tax ID number. If you haven’t built up any business credit, the very first thing you have to do is obtain a tax ID number from the IRS.

How Much Do You Have Right Now?
Your worth is calculated by your assets minus liabilities. It can be seen as how much you own right now or what can be used to pay debts and keep your operation going. Barely having anything to your name means your business has a higher chance of going bankrupt, and that makes lenders wary of giving you a loan.

Attitude and Experience
You should have an overwhelming amount of experience in the business you want to run. If you lack the required minimum, investors will feel better about the deal if you hire a well-qualified partner who has years of experience. At the bare minimum, you should know the lingo and procedures of the business world.

Investors want to know how much you’re going to put on the line to make your business a success. When they see that you’ll invest all of your time and your own money in your business, they’ll assume you’re very serious in making it a success.

Also, firm equity with a sensible amount of debt will help you through hard fiscal times. When you have just enough or no equity at all, it bumps up your odds of defaulting.