Your Business Loan Application Checklist
Businesses have a lot of options regarding getting loans. If you plan to apply for a small business loan, you’ll be relieved to hear that many lenders need the same information. Each loan will have a specific application you need to complete. Aside from that, you’ll have to provide the same information to any lender. Therefore, you should gather all of this before starting the application. Here is your business loan application checklist.
While the form will vary based on your chosen institution, they all want similar information. Reading some reviews, such as a BHG review, ahead of time will help you prepare for the questions the application asks. Here are some things you should prepare to answer:
- Why do you need the money?
- How will you use the money?
- What must you purchase, and who will you buy it from?
- What other debt are you responsible for, and who do you owe?
- Who are your managers?
You will probably also need to provide your personal background information on this form, such as your previous addresses, other names used, criminal records, and education. This information can help the lender understand whether you are responsible or not.
Your lender will want to know who your managers are. That is especially true if you use the loan to begin a business. The lender wants to ensure your managers are experienced and that you will succeed in repaying your loan plus interest.
Whether you apply for a private or government loan, you must submit a copy of a good business plan. Your business plan must include your projected financial situation, expected profits and losses, balance sheets, and cash flow.
The lender will want a copy of your credit report. To prepare for this, obtain a copy yourself ahead of time. Inaccuracies can negatively impact your chance of receiving a loan. Therefore, you must correct these before applying. They will also want a copy of your business’ credit documents if you have a business. You should also check this for accuracy before submitting your application.
You must submit a copy of your tax documentation for the last few years. You must also offer these for your business if it is already established. You must submit both if you have been in business for a while.
You must submit signed financial statements if you have a significant income claim from your business. Other times, you might also have to provide financial information in addition to the ones in your business plan, even if you don’t have too much stake in your company. Financial statements can include balance sheets, income information, cash flow patterns, and bank statements. You’ll want to gather all of these for the last year. Then, have these ready in case you need to submit them.
Accounts Receivable and Payable
Most lenders will also want a clear picture of your current financial state. Therefore, you should have details for your accounts receivable and payable ready.
The collateral requirements for loans vary widely. Some lenders will not require any collateral. Others may require substantial collateral, especially if you are a higher risk. You will often have lower amounts of collateral if you have a solid business plan and sufficient financial statements. Whatever your outcome, you should still assemble a document outlining your proposed collateral ahead of time.
Finally, you may have to submit several legal documents when applying for your loan. If applicable, gather your business license, articles of incorporation, contracts with third parties, lease agreements, franchise agreements, and organizing documents.
It is critical to keep good records when you are applying for loans. Make sure you have all of these documents together and organized. The lender will verify all of this information during their vetting process. Never provide misleading statements because it will keep you from getting a loan. Also, remember to keep a copy of these documents on hand for your reference.