Updated on May 21, 2009. 

IN HIS NEARLY 40 years as a business owner, Jim Heck of Findlay, Ohio, never once struggled to maintain a loan — until now.

Heck owns two thriving businesses: a commercial printer called Kennedy Printing and a rental property firm Heck Rentals. He also owns a piece of commercial property in Florida. Even though the longtime entrepreneur has excellent credit and never made a late payment, his bank recently urged him to seek funding elsewhere. “They wanted out of the commercial lending business,” he says. If this crisis was going on 20 or 25 years ago — when the business was still relatively young — Heck adds that “getting dropped by my bank could have been devastating.”

Fortunately, Heck managed to find another lender fairly easily. Other business owners, however, aren’t so lucky. The credit crunch has banks reining in riskier lending practices and keeping more cash on hand. As a result, start-up entrepreneurs and borrowers with exposure to troubled industries, such as housing and construction, are finding it increasingly difficult to secure loans. (The tighter lending requirements are also taking a toll on creditworthy borrowers like Heck.)

While the government's latest plan to provide $28 billion in small business loan guarantees as per the recently passed federal budget should eventually make it easier for small businesses to secure financing, it's not going to fix the lending environment overnight, says Maria C. Coyne, executive vice president of KeyBank in Cleveland.

For business owners who can't afford to wait, here are four ways to improve your chances of securing a loan:

Get your business in shape

These days, banks not only want to see that a potential borrower has a solid credit score, they want to review their entire package — from business plans to balance sheets, explains Jordan Peterson, senior vice president of business banking at PNC in Pittsburgh. Paperwork should be up to date, an experienced management team needs to be in place and there should be proof that customers are paying on time and debts are under control.

If the business's debts are too high, allocate extra financial resources toward paying them down. Or try negotiating better payment terms with the lender, says Coyne. Meanwhile, work on cutting expenses and ridding the business of unprofitable operations.

Put your financial statements in order

Most lenders like to see at least two years of financial statements, including income statements, balance sheets and profit forecasts. Also, expect a request for two to three years of business and personal tax returns, adds Coyne.

For certain types of loans, such as factoring loans — where a company sells its receivables in exchange for immediate cash (usually about 80% of an invoice's value) — banks may even request information about a customer or client's financial health. They might delve into their credit histories or ask to see how much money they owe you, says Howard Applebaum, chief lending officer at Sterling National Bank.

Improve your credit score

Business and personal credit histories still weigh heavily in a bank's decision to dole out a loan. To determine the health of your financial track record, attain a copy of your personal credit report. Each of the three credit reporting companies — Equifax, TransUnion and Experian — offer free access to your report once a year. To obtain your business's credit report (for $24.95), go to Experian's SmartBusinessReports.com.

Make sure to look for errors and mistakes that can negatively impact your score, says Torsten Gerwien, vice president of decision science for Experian's Business Information Services in Costa Mesa, Calif. Reports may include court judgments about child support payments, credit card defaults or liens against personal or business assets. Be sure to report any inaccuracies to the three credit-reporting agencies. If there's a judgment or a lien against you, present documentation such as receipts or payment stubs that prove you're actively working toward repairing the infraction, to the lender. (Read our story for more factors that can harm your credit score).

For an added boost, ask suppliers that extend credit to you to report your good behavior to the credit reporting bureaus, suggests Gerwien. (Click here for more ways to boost personal credit scores.)

Offer backup

Already having an established banking relationship with a lender will help your chances of getting a loan, says Peterson. Create a deposit account for your business or consider purchasing personal investments such as a certificate of deposit. Some banks will be more willing to lend to a business if collateral, such as the business's receivables or a commercial piece of property, is provided. Business owners can also personally guarantee loans – meaning that if they don't pay up, the bank can seize their personal assets. Having a personal guarantee is especially attractive to lenders that believe the credit crisis is far from over, says Applebaum. “It’s prudent for banks,” he says.

Other recent Starting Up columns:

• Starting Up: Laid Off? One Option: Become Your Own Boss
• Starting Up: Biz Owners See Red Over Bailout

("Starting Up," a weekly column written by Diana Ransom for smSmallBiz.com, follows entrepreneurs through the early stages of launching a business. Write to her at dransom@smartmoney.com.)