What You'll Need to Apply for a Small Business Loan
When it comes to applying for loans, most lenders require the same kinds of information. Each loan program has specific forms you will need to fill out, but for the most part, you'll need to submit the same types of documentation.
Here are some of the typical items required for any small business loan application:
Loan Application Form
Forms vary by program and lending institution, but they all ask for the same information. Either as part of the loan application or as a separate document, you will likely need to provide some personal background information, including previous addresses, names used, criminal record, educational background, and resumes showing evidence of management/business experience.
All loan programs require a sound business plan (including a complete set of projected financial statements) to be submitted with the loan application.
Personal & Business Credit Reports
Your lender will obtain your personal credit report as part of the application process. If you are already in business, you should be prepared to submit a credit report for your business. However, before submitting a loan application, you should obtain your credit reports from all three major consumer credit rating agencies and clear-up any inaccuracies or blemishes.
Income Tax Returns & Financial Statements
Most loan programs require applicants to submit personal and business income tax returns for the previous three years, in addition to one year of personal and business bank statements. Many loan programs also require owners with more than a 20 percent stake in your business to submit signed personal financial statements.
Accounts Receivable and Accounts Payable
Most loan programs require details of a business's most current financial position. Before you begin the loan application process, make sure you have accounts receivable and accounts payable.
Some smaller loan programs do not require collateral while loans involving higher risk factors for default require substantial collateral. Strong business plans and financial statements can help you avoid putting up collateral. In any case, it is a good idea to prepare collateral documents that describe the cost and value of personal or business property that will be used to secure a loan.
Depending on a loan's specific requirements, your lender may require you to submit one or more legal documents, including business licenses/registrations, Articles of Incorporation, contracts, etc.
If you would like help with assembling your business plan and ensuring you have the above documents ready for loan applications, visit the Workshops/Events Calendar page of the website and register to attend our free, 2-hour Business Plan Basics workshop or go to the Consulting page to request a one-on-one counseling appointment with one of our financing & lending consultants.
These tips were provided by the U.S. Small Business Administration. For more information on applying for small business loans, visit http://www.sba.gov/content/business-loan-application-checklist
Categorised in: Program Updates
This post was written by SBDC