A Guide to the Credit Process
Some say owning a home is the American dream. Millions of small business owners will argue, however, that owning one's own business is really the American dream.But while it offers rewards, owning a business is not easy. Entrepreneurship has its problems, and a critical--and sometimes fatal--one for small businesses can be the lack of financial resources to keep the dream going.
This portion of our site is to assist small business owners or entpreneurs who are seeking outside financing for the first time. Our goal is to highlight information that prospective borrowers need to know about the credit process before they apply for a loan.
Click on a topic to view that portion of the article
Sources and Types of Funding discusses the stages of a developing business, reasons to borrow, loan types, common loan features, loan agreements, and common loan restrictions.
The First Step outlines a vital component of the loan request--the dreaded business plan. (See also Developing a Winning Business Plan)
What the Lender Will Review covers the "Five C's of Credit Analysis" and what to do if your application is NOT approved.
A Sample of documents lenders will review includes the Profit and Loss Statement, Statement of Cash Flows and Balance Sheet.
Ratio Analysis lenders use are Profitability, Liquidity, Leverage, Turnover, and Pro Forma Financial Statements and Financial Projections.
Resources and How to Use Them guides small businesses to Technical, Financial Business and Loan programs. Names and numbers of New Jersey and New York organizations.
You may want to bookmark the Glossary of Financial Terms for future reference.
Reprinted with permission of Tracy L. Penwell, Tuko Fujisaki, Publication Productions and the Federal Reserve Bank of New York.
