Large Business Loan?

Basically I want to know the details of what a bank looks at in giving large business loans. I want to know what Investors look at. Now, on a hypothetical situation. Someone between 18 and 20 years old, wants to start their own self-sustaining business. They need a business loan for between 100-150 thousand dollars to open the business. What would they need to do to get a business loan like this? Would they be more likely to succeed with a business loan or an Investor? If you say Investor, please explain why. Thanks for your help! I'll pick a best answer when i find out what i need to know.

Large Business Loan?

If you're applying for a loan and if it is a big amount, banks and even the SBA may consider other factors aside from your business credit:

- A business plan explaining what the business is

- Your background and experience in the business -- in my experience, this is KEY in the eyes of the bank because they want to make sure that you know what you are doing and that you can make the business work. If you don't have any experience with the business, have someone on board that knows the business to give banks assurance that someone will guide you

- Your credit factors because it shows your dependability and how well you handle credit. They will do a credit check on you and poor credit history may be frowned upon, or even reason for the disapproval of your loan application

- Your collateral. Banks, even SBA guaranteed loans, want the borrower to show collateral. They want to be guaranteed that somewhere somehow they can get payment from you

- Condition or terms of loans. Banks would want to know three important things: %26quot;How much money are you requesting? What will it be used for? and For how long will it be needed?%26quot; Banks oftentimes prefer to approve loans for items that can be identified, has lasting value, and can be repossessed and sold if things fail.

If you are considering angel investors, Business 2.0 http://money.cnn.com/2006/02/28/magazine... has a very good article on angel investors, what they typically look for, what kind of investments they support, etc.

If you are between 18-20 with no prior experience with running a business, particularly in this industry, both banks and investors question your capability to run the business. You need to have someone older with more experience in the business and industry fronting for you talking with banks and investors. As much as they like the passion of the youth, it is unlikely they will approve the loan or investment given the sheer inexperience.

Take for example Napster. It is acknowledged that Shawn Fanning is the creative genius in this business, but it was his uncle John Fanning who negotiated all the deals and took care of running the day to day operations of the business. Banks and investors just want to be reassured that they can get their money back, and the experience of the person seeking the loan/investment is always critical