Why You Must Have a Business Bank Account to Apply For a Business Loan
If you are a business owner, or independent contractor using one bank account, you have probably noted a lot of overlap between your business and personal finances. There is clients’ money coming in and business as well as personal expenses going out. You may have also tried to apply for a business loan but were turned back. Lack of a business bank account could have been the reason your business loan application failed. So, is this business bank account that necessary? Why do you need a business bank account to apply for a loan? Read on to find out why a business bank account is that important.
To Keep “Corporate Veil” Contact
Your loan provider wants to make sure that the loan advanced to you is used for business purposes and not for your personal uses. A business bank account separates business uses from personal uses.
To Avoid Tax Problems
Loan providers want their clients to maintain clean records of accounts for easy tax calculations. Business bank accounts make it easy for you to identify all taxable transactions. This enables you to identify legitimate deductions too.
To Boost Legitimacy
You need to convince your loan provider that you are a legitimate business. A business bank account adds legitimacy to your business as it shows your scale of operations. It is also a sign of professionalism, as all business transactions should bear the business’ name and details.
Clear Record Keeping
Your loan provider wants to know if you are capable of repaying your loan. The bank will need your banking information to see how your business is doing. Your previous banking transactions in addition to other information that will be used to calculate the amount of loan that can be advanced to you.
The Business Deduction Rule
The law is clear that only businesses can deduct business expenses. For you to deduct business expenses when determining your tax amount, you will need to have a business bank account, which shows all these expenses. Your loan provider wants you to be able to reduce on expenses to save enough money to repay the loan.
Requirement for Incorporated Businesses
If the business enterprise is incorporated, the IRS requires you to have a business bank account. This applies to partnerships, incorporated sole proprietorship and corporations. Since this is a requirement by the authorities, your loan provider must ensure you have a business bank account before advancing you the loan.
Now you know the importance of having a business bank account when applying for a loan. As much as your loan provider wants to advance the loan to you, the business loan provider will need to ensure that you have complied with all the requirements before they can offer you the loan you need.
Other Useful Resources By Plousio
- What is a business loan?
- Credit Score Explained
- Why borrow money to purchase business equipment?
- Business Loan Underwriting Explained
- Interest Rates & Factor Rates Explained
- Why business loans get declined
- Business bank account requirements for loans
- Preparing for a business loan
- Getting approved for a business loan
- How to qualify for a business line of credit?
How Does Plousio Work?
Plousio makes it easy to find a great small business loan with the most competitive rates. Simply answer a few questions, select a lender and fill out our account creation form and you’ll start receiving new offers right away! With 3 easy steps, you can get your death care business funded!
Step #1: Apply online or call 1-508-848-0534
Step #2: Receive the most competitive offers
Step #3: Get funded within 24 ~ 48 hours
Contact a Plousio Funding Adviser Today
If you need help with determining your funding eligibility or preparing application and documents, please contact our funding adviser today. Plousio funding advisers pride themselves in transparency and non-aggressive communication practices. They are not here to make sales quotas, instead, focus on helping you every step along the way of your funding process. In the unlikely event, you do not think that Plousio is the right solution for you, just let us know – No problem! We promise we wont be calling you 5 times a day like some other companies do.