What are some Business Loan Prerequisites

Question

Hi, I have a seasoned (over a year old) business and have been told a good way to get funding for starting my real-estate journey is through business loans. I do not know if my business can qualify for a loan because of these factors:

- it does not have monthly deposits or income coming in

- it does not have a business/bank account set up under it

- all it has is the letter of confirmation used for the verification process

- the EIN is created but that's all I did really

Where should I start to get my business (an LLC) in good standing to be pre-approved for a business loan? What steps should I take to confirm it is still valid? Is there any licenses, certs, or paperwork I need to fill out? Are their any taxes I need to pay for its creation?

Any info would help me focus my direction and lead me to the right steps.

Thank you for your time, Patrick Peterson

Clayton Silva · Answer

Sure thing, so we can do DSCR loans in LLC name.  You are still the personal guarantor and it can still show on your personal credit, however these loans are great for investors who want a seamless closing with their LLC on the loan and putting the property's title in the LLC as well.

Jay Thomas · Answer

For your new business seeking a loan, there are actionable steps to bolster its credibility and improve loan eligibility. Begin by establishing business credibility: open a dedicated business bank account, build a business credit history, file annual reports, obtain necessary licenses, and meticulously document business activities. To enhance loan eligibility, craft a comprehensive business plan, maintain a strong personal credit score, and seek guidance from a financial expert. Confirm the validity of your Employer Identification Number (EIN) and verify state business registration. For LLCs, understand the tax obligations and consult a tax advisor for compliance. By following these steps and seeking professional advice, you'll strengthen your business foundation and increase the likelihood of securing a business loan for your real estate venture.

Clayton Silva · Answer

A few things here:

When you say a business loan do you mean: 1) a business line of credit 2) a DSCR loan that closes in an LLC 3) a full non-recourse loan with your business as the guarantor?

Each one is going to have different requirements based on your goals.  Most people mean they are looking for a loan they can put in their LLC similar to a DSCR loan and there is very little that is needed for that loan type and we do them all the time.  It really depends on what you are trying to do.

Hope this helps!