I had two eye opening meetings with bankers from a national and regional bank this week both echoing the same things.
Takeway #1:
Two stories. Same Result. Two companies were looking for a simple business loan. Both had revenues in the millions of dollars with 10+ employees and have been open for multiple years. Both had owners that had poor personal credit. The Result was the same. No loan.
Bottom line is this: If you need a line of credit or loan for your business, your personal credit score matters. It is not the only item considered, but it is a large piece of the puzzle. As a result, don't be caught sleeping. Pay attention to your own personal financial health. Otherwise, the results can be extremely unfortunate.
Takeway #2:
No profit=No Loan
I can't tell you how many times I've heard the same story.
Business Owner Says: Don't take my tax return seriously. It says I'm operating at a loss, but this is not the case. I just worked with my CPA so that I don't have to pay Uncle Sam.
Bank Says: Sorry Sir.
I don't buy this story and neither does Uncle Sam. No profit on the tax return often leads to no loan from the bank.
Consider this when filing your taxes. Be honest and report your profit honestly.
