Guide to Applying for a Business Loan
Ready to apply for a small business loan? Great. Now you need to fill out forms to get the approval…
Follow the following steps to get the you best chance of approval of the business loan as noted below.
1. Start By Asking Yourself, Why?
Are you planning to expand your business? Does your business need additional cash flow to support future growth or to pay off debts? You should determine why, how much and your plan on using the additional capital. This will be helpful to the financial lender in their decision process.
Will your business be able to support the additional loan debt (i.e., pay back the loan). Timing is everything in life. If your business is performing well, the more likely approval of the business loan.
There are a variety of lenders and financial options available to small businesses. Do your due diligence and compare the offers before you apply.
Financial lenders have special qualifications or restrictions for a variety of industries due to risk evaluation. For example, construction, online, wagering, non-profits have restrictions or additional documentation requirements. Check your business industry classification before investing considerable time.
2. Organize Your Business and Personal Information
Every financial lenders requirements are different, but there is basic information that all will require to approve your small business loan.
Start with a clear description of your business plan and how you intended to use the small business loan funds together with a plan of repayment of the debt.
You should have available information related to your business: inception date, profits, losses, assets, outstanding debts, customer profiles and references, etc. Also, you should have available your business licenses, permits, articles of incorporation, tax filings, etc.
A personal profile of you as the owner and partners will be of interest to the financial lender. This will include: background section, personal credit report, criminal record, previous legal names, previous addresses, bankruptcies and likely more.
3. Prepare Your Business Financial Documents
The financial lender will require financial documents such as accounts receivables, balance sheets, bank statements, multiple time-span profits and loss statements, and tax returns. You should have your accountant help you with this.
Also your personal and business’s credit scores will be of interest to the lender. (They want to know if they are going to have problems getting their loan paid back.) If your business credit score is less than 600, this may raise a concern with the financial lender. This will affect the the terms and conditions surrounding your final loan offer.
Have your accountant prepare your business debt schedule. This document outlines all outstanding debts, credit amounts, monthly payments, etc.
If your business rents its location, you should have available documentation from the owner as to your tenant status, rental payment history and lease agreement during the loan period.
4. Fill Out the Small Business Application
An organized, well packaged application will speed up the review process and create a positive impression with the financial lender. Have your accountant or business partner review the application package before sending to the lender.
Alternatively many lenders now require that you fill out an online form, provided additional support documents as attachments. This allows more structure and streamlines the lend process.
Regardless, you need to be transparent and honest about your business and personal information submitted. Lenders want to provide capital businesses. That´s their business. Don´t give the lender any reason to doubt you or they will reject you out of hand.
The steps for applying for a small business loan are presented. The business owner should determine why a small business loan is needed, how it will be used, and how it will be repaid to the lender. Both business and personal information, along with business financial statements, will be needed for the loan application. The business owner should be transparent in the information provided to ensure the trust of the financial lender and loan approval.
Please call us at (888) 213-3383 to help review which financial product best serves your business needs or Contact Us via Email.