What to Know and Do Before Requesting a Business Loan

Robert Zapata Osbaldo “Ozzie” VelázquezLoan Consultant Loan ConsultantWest Los Angeles Orange County

Healthy personal money management habits with good documentation of business income & expenses are fundamental to have access-to-capital.

Positive personal credit profile with a solid business financial position will improve opportunities to access capital for business growth.

What to Know and Do Before Requesting a Business Loan

* Sources TransUnion, Fair Isaac, Experian, About.com, Springboard, The Federal Reserve Commission, The Federal Reserve.

** Creditscore.net

• 70% of consumers have errors in their credit reports

• 25% of errors can negatively impact your credit score**

The good news: many credit report errors can be corrected and credit ratings can be improved

Know your Personal Credit Profile

What makes up a credit report?A record of your credit activities that lists:• Credit-card accounts • Loans • Balances • How regularly you make your payments

A credit report also shows legal actions taken

against you for unpaid accounts

* Source: Fair Isaac

What is a credit score?

What makes up a credit score*?Payment History

35%

Types of Credit in Use 10

New Credit 10%

Length of Credit History

15%

Amounts Owed30%

* Source: Fair Isaac

Before Requesting a Business LoanConsider focusing on the top 2 factors that have the biggest impact on your personal credit score:

1. Payment history • Paying on time (consider auto payments)

2. Amounts owed • a healthy amount is 35% or less of the balance

for each account

Before Requesting a Business LoanMonitor & review your credit profile regularly

1. Once a year directly with the credit bureaus • Experian.com, TransUnion.com, Equifax.com• On-line, in writing or by phone• www.annualcreditreport.com

2. Monthly with your credit account statements• Credit Cards Statements• Installment Accounts

Before Requesting a Business Loan

Make use of a simple budget 1. Track 2 to 3 months of your income & expenses2. Identify your monthly averages3. Set budget goals 4. Develop a monthly disciplined money

management habit

Budgets help control & prioritize spendingMoney that comes in

Money earned

Bonuses

Alimony/Child support

Investment income

Retirement income

Total Money In

Money that goes out

Rent/Mortgage

Utilities

Food & Drinks

Clothing

Medical, Dental, Vision

Transportation - Automobile

Credit card & Loans

Movies & Restaurants

Savings & Retirement

Other Unplanned

Total Money Out

Budgets help control & prioritize spending

Before Requesting a Business LoanKeep in mind the lenders perspective

1. How will I repay the loan?2. Is my loan request realistic, given my proven

business cash flow?Prepare documentation/proof of the business’s loan repayment capacity

3. Bank statements4. Personal & Business Tax Returns 5. Year-To-Date Financial Statements

Visit www.sba.gov for small business guides & resources

Before Requesting a Business LoanCredit Building Tips:

• Get a secured credit card from a bank

• Consider an Opportunity Fund Loan (CA businesses)

• Become a secondary account holder

• Have a minimum of 3 lines of credit opened

• Don’t close good historical accounts

• Set your goals — and stick to them

Before Requesting a Business LoanRemember: Business owners that make use of budgets show they can manage money well, which creates confidence in lenders.

Businesses with solid sales income proof, via a bank account and tax returns, can show capacity for loan repayment and have greater opportunities of accessing capital.

Opportunity Fund Small Business Loans• Amounts from $2,600 to $100,000

• Micro $2,600 to $20,000• Express: $2,600 to $10,000

• Terms up to 5 years• Fixed interest rates of 8.5% - 18%

Opportunity Fund Application Checklist• At least 1 year in business• Completed & Signed Application: 2 pages• Personal & Business Income Tax Returns: 1 yr.• Business Bank Statements: last 3 months• Proof of Business: License, Permits or Schedule C• Copy of the title or registration & VIN # of commercial or personal

vehicle available as collateral* (*this will be used to help determine the maximum loan amount)

Robert Zapata Osbaldo “Ozzie” Velázquez

Direct: (323) 506-3529 (714) 984 - 9405

Fax: (323) 978-4610 1 (415) 744 - 1183

E-mail: robert@opportunityfund.org osbaldo@opportunityfund.org

www.opportunityfund.org/loans