Question:

I understand that President Obama has authorized the Small Business Administration to provide more generous loan guarantees to small businesses. While I’d like to take advantage of this, I’m worried about being penalized because I don’t have any existing loans. How does this work? —Name Withheld

Answer:

It all boils down to the lender and whether or not the borrower is a good credit risk, says John J. Miller, a spokesman for the Small Business Administration. While lenders like seeing that you’re able to pay back a loan without any problems, they can also gauge your credit worthiness in other ways. For instance, through your personal and business credit histories, says Miller.

Lenders like to see at least two years of financial statements, including income statements, balance sheets and profit forecasts. Supplying two to three years of business and personal tax returns might also help your case, says Maria C. Coyne, executive vice president of KeyBank in Cleveland. In addition, having an experienced management team in place and proof that customers are paying on time and debts are under control will go a long way toward landing you the loan. (For our story on improving your chances of landing a loan, click here.)