Obtaining small business credit has proven to be a distinctive challenge for many fledgling owners venturing into the world of entrepreneurship. An individuals past credit problems can send banks running in the opposite direction. However, if you play your financial cards right, you can realize the American dream of owning your own business.

When trying to obtain small business credit, the first question on everyones mind is, Where do I borrow? It can be a dilemma, due to the fact that until youve developed a good track record with business credit, many commercial banks and other traditional lenders will be reluctant to extend credit your way. Thus, in order to identify the type of lending institution most likely to provide your business with financing, its a good idea to pinpoint which of the early stages of development your business is in.

Small Business Credit: Stages of Development
As mentioned above, acquiring small business credit will means recognizing the category, or stage, your business is in. The first stage typically belongs to start-ups, which is generally a one or two person operation with a small business idea in mind. Stage two businesses have thoroughly fleshed out business plans and product samples, but no revenues. A stage three business has full business plans in place, as well as pilot programs. Stage four operations have been running for some time and feature documented revenues and expenses.

For owners of businesses in stages one and two, lending institutions will suggest that they seek financing from informal investors rather than going through a bank. On the other hand, owners of businesses in stages three and four are better equipped to approach a commercial bank or another traditional lender for a loan.