BUSINESS LOAN ASSESSMENT TOOL
Name of Company:
Contact Name:
Phone No.:
Company Street Address:
Are You Ready to Qualify for a Business Loan?
1. Do you have a good personal credit history and credit score?
YES
NO
2. Do you have a well-thought-out loan proposal/business plan?
YES
NO
3. Have you filed your personal and business income taxes?
YES
NO
4. Are all of your applicable taxes paid or otherwise current? This includes income
taxes, payroll taxes, local real estate and personal property taxes, etc.
YES
NO
5. Do you have any personal and/or business collateral to secure a business loan?
YES
NO
6. Are you willing to personally guarantee a loan?
YES
NO
7. Can you demonstrate that your business has the ability to repay a loan?
YES
NO
8. Do you have enough money of your own to put into the business project?
YES
NO
9. Does your business have a positive net worth?
(EXISTING BUSINESSES)
YES
NO
10. Is your business capable of carrying more debt?
(EXISTING BUSINESSES)
YES
NO
11. Does your business have adequate systems and processes in place to enable your
business to function efficiently, as well as managers and advisors capable of leading
your business to the next level of growth?
(EXISTING BUSINESSES)
YES
NO
12. Do you have experience in running your own business? (START-UP BUSINESSES)
YES
NO
If you cannot answer “YES” to all of the above questions you may not be adequately prepared to apply for
financing at this time. We suggest that you contact a Technical Assistance Provider, (refer to last page of this
document), to assist you in evaluating and addressing the needs of your business.
This survey should be used as a self-assessment tool only. It does not include all of the factors considered by
lenders in evaluating a loan request.
January 2004
Are You Ready to Qualify for a Business Loan?
1. Do you have a good personal credit history and credit score?
Good personal credit history, (and your personal credit score), is considered to be one of the most important
factors in identifying borrowers who are likely to repay their loan, so most loan programs will look closely at
your personal credit history and credit score. Blemishes on your record, however, will not automatically
disqualify you for a loan. If you have had credit problems in the past 10 years – bankruptcy, slow payment,
collections, judgments, etc. – it may be more difficult or time-consuming to qualify for a loan. If that history
can be explained by a particular incident, you will be expected to supply written information on the situation
and how you attempted to repair your credit problems. If you have persistent credit problems, you may need to
“repair” or “rebuild” your credit history before proceeding with a loan request.
If you do not have a recent personal credit report, you can obtain one from any number of resources available
on the Internet, or by contacting any one of the three major credit-reporting agencies below:
Transunion
http://www.transunion.com/Contact.jsp
800-888-4213
Experian
http://www.experian.com/customer_service/mail.html
888 397 3742
Equifax
http://www.equifax.com/
1-800-685-1111
RETURN TO TEST
What is a Credit Score?
Credit bureau scoring is a scientific way of assessing how likely a borrower is to pay back a loan. A Credit
Bureau Score is based on various data available in the borrower’s credit report. The Score measures the relative
degree of risk a potential borrower represents to the lender. A higher Score indicates a better credit quality.
The Score, itself, is considered to be an accurate gauge of how great a risk you represent. It is not a measure of
a borrower’s income, assets, or bank accounts, although those and other factors are still considered by lenders,
independent of the Score. Credit Bureau Scores do not use race, color, religion, national origin, sex, marital
status, or age as predictive characteristics. Also, any information that is not present in a credit file is not used in
creating a Credit Bureau Score.
RETURN TO TEST
2. Do you have a well-thought-out loan proposal/business plan?
Loan Proposal: Approval of your loan request depends on how well you present yourself, your business and
your financial needs to a lender. Remember, lenders want to make loans, but they must make loans they know
will be repaid. Before you approach a lender with a loan request, you should identify in detail how much
financing you need and what you’re proposing to do with the loan funds, whether it is to finance the purchase of
equipment, real estate, working capital, start-up costs, etc. Put the detailed loan proposal in writing, including a
list of available collateral, proposed method of repayment, description of how the loan will help you accomplish
your business goals, etc.
Business Plan: For a new business especially, the importance of a comprehensive, thoughtful business plan
cannot be overemphasized. Much hinges on it: outside funding, credit from suppliers, management of your
January 2004
operation and finances, promotion and marketing of your business, and achievement of your goals and
objectives. Many lenders will ask to see a copy of your business plan.
RETURN TO TEST
3. Have you filed your personal and business income taxes?
Traditional and non-traditional lenders alike want to see that individuals and businesses have met their tax
obligations for both filing and paying all taxes. Copies of all applicable tax returns, among other things, is often
required to be provided to be given consideration for business financing.
RETURN TO TEST
4. Are all of your applicable taxes paid or otherwise current? This includes income taxes, payroll taxes,
local real estate and personal property taxes, etc.
Individuals and/or businesses with unpaid, or non-current, taxes of any kind will generally not be approved for a
loan. You should be able to provide evidence that all personal and business federal, state and local taxes are
paid or otherwise current.
Your local tax assessor’s office can provide information on the status of local real estate and personal property
taxes. For information on local taxes in Mecklenburg County contact the county tax office at:
Mecklenburg County Tax Customer Service Center
http://mcmf.co.mecklenburg.nc.us:3007/cics/txar/txar03i
704-336-4600
RETURN TO TEST
5. Do you have any personal and/or business collateral to secure a business loan?
Although lenders generally do not decline a loan solely for lack of collateral, the more collateral you have, the
more favorably your application will be considered. Business assets purchased with the proceeds of a loan are
typically required to be used as collateral. These may not be enough, however, because these assets often will
be considered to have a value less than that which it cost you to purchase them. For this reason, lenders
typically look for secondary types of collateral to secure the loan in the event the collateral must be liquidated
should the business default on the loan at some future time. Business and personal assets may be considered as
collateral, depending on the type of asset.
RETURN TO TEST
6. Are you willing to personally guarantee a loan?
Most lenders will require you to personally guarantee a loan. In addition, many lenders will also require that
RETURN TO TEST
owners of 20 percent or more of the business also provide personal guarantees.
7. Can you demonstrate that your business has the ability to repay a loan?
Existing Businesses: If your business is profitable, there should be a demonstrated ability to repay any new
debt. If the business is not profitable, then it is very important to show how the requested loan amount will
make it profitable and enable the business not only to grow, but to repay the loan as well.
Start-Up Businesses: You will need a business plan including a statement of projected income and expense.
This statement details how you expect to repay your loan and any other debt. Start developing your projections
by finding as much data as possible on similar businesses. Your local library can be of assistance.
All Businesses: Secondary sources of repayment, such as personal household income, will be considered
during the credit review process. Technical Assistance Providers can assist you in assessing your ability to
repay a loan. A list of area Technical Assistance Providers is provided at the end of this test.
RETURN TO TEST
January 2004
8. Do you have enough money of your own to put into the business project?
All loan programs require business owners to invest a significant amount of their own funds or assets in the
proposed business project. This shows that the owners are committed to the business as well as reduces risk to
the lender. The amount of owner investment depends on a number of factors including type of business, size of
business, loan program being considered, etc. While some loans may require an owner’s investment of as little
as 10% of the total amount of financing needed, many will require from 20-30 percent. If you have insufficient
personal funds to invest into the business project, explore ways to raise the additional necessary funds through
family members, investors, etc. Some municipalities administer special business equity loan programs for
businesses located in designated development/revitalization zones. Check with your local Economic
Development office to see if any such programs exist.
RETURN TO TEST
9. Does your business have a positive net worth? (Existing Businesses)
The net worth (total assets minus total liabilities) of your business should be positive. If there are loans from
shareholders on the balance sheet and you are able to subordinate these loans (not repay the shareholders) while
you repay the bank loan, you may consider these shareholder loans as equity. Technical Assistance Providers
can assist you in calculating your net worth. A list of Charlotte area Technical Assistance Providers is provided
at the end of this test.
RETURN TO TEST
10. Is your business capable of carrying more debt? (Existing Businesses)
Businesses that have excessive debt will find too much of their profits directed towards paying back loans rather
than building retained earnings that can support future growth. Consequently, loan programs look more
favorably at loan requests that do not add too much debt to the business. Technical Assistance Providers can
assist you in assessing your debt situation. A list of Charlotte area Technical Assistance Providers is provided
at the end of this test.
RETURN TO TEST
11. Does your business have adequate systems and processes in place to enable your business to function
efficiently, as well as managers and advisors capable of leading your business to the next level of growth?
(Existing Businesses)
As businesses expand, they become more complex and need more sophisticated systems and processes as well
as management to handle a variety of required tasks, (i.e. strategic planning, marketing, accounting, inventory
control, purchasing, accounts receivables, collections, personnel, payroll, etc.). Technical Assistance Providers
can assist you in assessing your systems and processes, as well as your management needs, as you grow your
business. A list of Charlotte area Technical Assistance Providers is provided at the end of this test.
RETURN TO TEST
12. Do you have experience in running your own business? (Start-Up Businesses)
For a new business especially, it is important for the business owner to demonstrate experience in the industry
and/or entrepreneurial experience. If you have never owned or operated a small business, you are strongly
encouraged to attend entrepreneurial training classes and/or seminars available in your area. Check with your
local community college, SBA offices, public libraries, etc. to identify available training opportunities.
RETURN TO TEST
January 2004
BUSINESS DEVELOPMENT RESOURCES
Revised September 2010
If you fail to plan, you plan to fail.
The following resources can assist businesses with developing plans for success!
CPCC Institute for Entrepreneurship
CPCC Central Campus
Professional Development Building
124 E. Independence Blvd.
Charlotte, NC 28235
Phone (704) 330-6831
CPCC's Institute provides one-on-one counseling and
access to their resource center with materials and
resource information to plan or improve small
businesses. Free seminars and tuition based courses on
business related topics are offered most months at the
Institute. Whatever your small business needs, the
Institute staff and associates are ready with reliable
information, solid advice, skills training, one-on-one
counseling, and help in making the right business
connections. Visit their web site for a current schedule
of business offerings:
www.cpcctraining.org/e-institute/
Minority Business Development Center – Charlotte
1000 Seaboard Street, Suite B-10
Phone (704) 332-2383
Able to assist businesses in all stages of their growth,
the MBDC offers managerial and technical services to
help assist minority entrepreneur's in achieving their
business goals by providing assistance in business
planning, marketing, management, other technical
assistance and financial planning.
Charlotte Chamber of Commerce
330 South Tryon Street
Charlotte NC 28202
Phone (704) 378-1300
www.charlottechamber.com
The Chamber provides marketing, educational,
networking and leadership opportunities for members.
They are an excellent source for information about
local markets, business activity and business
opportunities.
NC Lawyers for Entrepreneurs Assistance Program
(NCLEAP)
www.ncbar.org/ncleap; 1-800-662-7407
A project of the NC Bar Association that provides free
legal services to low-wealth entrepreneurs who are in
the process of starting or expanding their business.
NCLEAP can assist with legal formation, compliance
with government regulations, contracts, personnel
issues, property ownership & leasing issues, tax
planning, etc.
Counselors to America’s Small Business (SCORE)
(formerly Service Corp of Retired Executives)
6302 Fairview Road Suite 300
Charlotte, NC 28210-2227
(Across from SouthPark Mall)
Phone (704) 344-6576
www.charlottescore.org
SCORE members are current or retired business
professionals who provide volunteer business services to
those interested in starting or expanding a business. Free
consultations are available to help individuals define a
successful marketing strategy, develop a marketing plan or
help solve business problems.
Small Business & Technology Development Center
(SBTDC)
The Ben Craig Center – 8701 Mallard Creek Rd
Charlotte NC 28262
Phone (704) 548-1090
www.sbtdc.org
The SBTDC helps small business owners meet the
challenges of today's business environment, manage their
ever-changing world, and plan for the future of their
business. They provide management counseling and
educational services to small and mid-sized businesses.
Their primary focus is management counseling on issues
such as financing, marketing, human resources, operations,
and business planning and feasibility assessment.
Public Library of Charlotte & Mecklenburg County
Main Branch
310 North Tryon Street
Charlotte, NC 28202
www.plcmc.org
Sample business plans, business research tools, searchable
data bases and much more are all available on the second
floor of the Main Library. Also available is The
Foundation Center’s Cooperating Collection of nonprofit
and grant materials. In addition, SCORE® provides free
Individual Counseling Sessions to Business Start-Ups and
Entrepreneurs at the Main Library every Tuesday from 10
a.m. until 2 p.m. by appointment.
Small Business Administration
www.sba.gov
The SBA’s website provides information on how to start,
manage, finance and sell a business. Visit their site for
business resources for every stage of your business life
cycle.
SBA Charlotte Regional Office
6302 Fairview Road, Suite 300
704-344-6563
The above list is not meant to be exhaustive. Business owners are encouraged to seek technical assistance from a
provider of their choice, regardless of whether or not the provider is reflected on this list. Fees for services provided are
set at the sole discretion of the provider.