While applying for a business loan may feel daunting, the process is much easier if you walk into the loan establishment fully prepared. Before you fill out that business loan application, gather all the documentation you’ll need to prove your business needs and deserves the money.
Income Tax Returns
Gather your tax returns—both personal and business—from the last two or three years. Lenders want to see that you’re an honest taxpayer.
Is your business too new to have any tax returns of its own? Partner with an accountant who will make a projection of what your business returns may look like in the coming year.
Potential lenders want to see what the cash flow to and from your business looks like. Bank statements can project what your cash flow will look like in the future as well. A business that is actively earning revenue is more likely to get a loan than one that is stagnant or losing money.
Your credit score is a metric that shows how reliable a debtor you are. When applying for any loan, you’ll likely have to submit your credit score; the lender wants to see if you’re in the habit of paying off your debts on time. Have both personal and business credit reports handy when you apply.
A well-crafted business plan is the cornerstone of your loan application. It includes projected financial statements and plans for what you want to do with your business going forward. Take the time to write a sound business plan that details why your business is special, what it will do for your community, and how you’ll use the loan.
This will be a bit of paperwork from your bank or another lender. They’ll want to ask you some basic but specific questions: Who are you, and how can the lender contact you? How much capital do you want to borrow? Who else is on your management team? Go through the application form with a fine-tooth comb and watch out for fine print.
When filling out a business loan application, attention to detail is key. If you have all the documents you need to move forward, the process won’t seem so overwhelming. A loan could be the key to your small business’s success down the line, so don’t be too intimidated to apply for one.
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