Top 5 need-to-know secrets to get approved for a business loan

Think you're ready for a small-business loan? Think again.

Most business loan applications are turned down on first review. A recent Biz2Credit.com survey found that only about 20% of small-business loan applications to large banks are getting approved today. And even at small banks, which tend to cater to local businesses, only 50.3% of loans are approved.

Wells Fargo & Co. business banking manager Tim Hileman says there are five areas where business owners could brush up on their knowledge before filling out a credit application. He says taking time to understand these five things are likely to improve borrowers' chances when they talk to a lender. The Charlotte banker shared five tips with us this week.

"Healthier businesses, better balance sheets and stronger revenues mean more businesses today qualify for credit," he says. "Now it's up to all of us in banking to keep spreading the word about how more small businesses can get credit-ready before pursuing a loan."

1. Personal credit history

Business and personal credit history are important when pursuing business credit, particularly smaller loans. Looking at credit history helps us answer the question: How has the borrower handled credit obligations? Both business and personal credit are relevant. On the personal side, a lender will look at the business owner's history of credit management, including credit score and details of the individual's credit record. A lender also will want to know whether the business applying for credit has paid suppliers and other business obligations in a timely manner, including those to other financial institutions.

Adam O'Daniel covers banking, entrepreneurs and technology for the Charlotte Business Journal.