Strategic Playbook
The Path to Bank Financing
Alternative lending isn't a dead end—it's a stepping stone. This playbook shows you how to use today's funding to build the track record you need for prime bank rates tomorrow.
The Financing Ladder
Think of business financing as a ladder. Most businesses can't start at the top (prime bank rates). Instead, they climb:
4
Prime Bank Loans & SBA
5-10% APR, longest terms, lowest payments
3
Online Term Loans
15-35% APR, 1-5 year terms
2
Lines of Credit
Flexible access, builds credit history
1
Revenue-Based Financing / MCA
Fastest approval, highest cost, shortest terms
What Banks Want to See
Banks are risk-averse. They want proof you can handle debt responsibly. Here's their checklist:
2+ Years in Business
Shows stability and survival through business cycles
680+ Personal Credit
Demonstrates personal financial responsibility
Profitable Financials
Positive net income on tax returns
Low Debt-to-Income
Not overextended with existing obligations
Collateral
Real estate, equipment, or receivables to secure the loan
Payment History
Track record of paying back business debt
Your 12-Month Action Plan
Months 1-3: Establish the Foundation
- • Use alternative financing to solve immediate capital needs
- • Set up automatic payments to ensure on-time repayment
- • Open a business credit card and use it responsibly (under 30% utilization)
Months 4-6: Build Credit History
- • Pay down personal debts to improve credit score
- • Ensure all business vendor accounts are paid on time
- • Consider a business line of credit to diversify credit types
Months 7-9: Document Your Success
- • Work with an accountant to ensure clean, profitable financials
- • Gather all successful repayment records
- • Prepare a business plan showing growth trajectory
Months 10-12: Apply for Bank Products
- • Start with your existing bank relationship
- • Apply for SBA loans through SBA-preferred lenders
- • Consider credit unions—they often have more flexible criteria
Common Mistakes to Avoid
- • Stacking debt: Don't take multiple advances at once—this kills your cash flow and future options
- • Missing payments: Even one late payment can set back your timeline by months
- • Applying too early: Premature bank applications create hard inquiries and rejections on record
- • Ignoring personal credit: Most small business loans require a personal guarantee