Getting all the proper documentation that is needed to apply for a business loan is not something you can skip out on. Even though this may seem time consuming, these documents will be your ticket to having successful business financing. You should come in fully prepared with every loan document your lender could possibly request. Depending on the type of investor you choose, there will be slightly different requirements. We will discuss some steps you should take before applying for the loan, and the exact documentation you’ll need when you start the application process.
First and foremost, you should always come in with a strong business plan when you apply for a loan. This should be a familiar concept to you and your company, but in this circumstance, you should tailor the plan to better fit your needs. When you have an exact purpose for your loan, the chances of getting approved will be much higher.
Utilizing smart business finance will help define your financial objectives for your company to be successful. A lender wants to see how the money will be spent and how it will be paid back. Be sure to include a description of your business, your marketing plans and your projections for future sales. Back all these plans with numbers and supporting documents. You should create important financial statements, like a profit and loss statement, and a cash flow statement. It is always a good idea to know your credit when applying for a small business loan. If your company is just starting, you’ll want to make sure your personal credit score shines bright. If it is below a 650, consider taking the time to improve your score before you apply for a loan. If you come in knowing your business’ financing plan, lenders will automatically think of you as less risky. The lower the potential risk, the better the chances of your loan getting approved. And now that you have your plan in place, let’s look at the specific documents you’ll need to collect.
When you choose to go with this modern approach to small business financing, you can probably expect the quickest funding estimates. When you choose an online marketplace, you’ll be getting a team of experts who will analyze your business’ performance to get you the best chance at a loan approval. It will be a much less time-consuming process, and you won’t have a face to face interview to worry about either.
Some of the loan documentation that should be provided to acquire funding should include:
Generally, an online loan application will take much less time than applying for a loan at a bank for example. If you decide to go with a Small Business Administration (SBA) loan from a bank, you may need to collect additional documentation. You will also need to be able to prove you can afford to pay back the loan. Here are a few more examples of specific documents they may ask for:
Resumes: feel free to include a personal resume for your business finance
Financial Statements: you will most likely need to come up with a profit and loss (P&L) statement, to summarize your business expenses during a specific time period. You should also have projected finances in mind, to show your loan purpose.
Loan Application History: be upfront and honest about previous loans you’ve taken out. Lenders will want to see that you have paid back all loans in a timely manner.
Business Certificate or License: you should obtain the original copy of your business license to bring with you. You’ll most likely need this for an online lender as well.
Documentation of Collateral: some lenders want you to show personal assets you’ll be willing to use, to repay back your loan if all else fails. Be sure to bring titles, showing ownership of the collateral you plan on using.
Although collecting all these documents may take away some of your time, you may end up finding value throughout the experience. Afterall, by coming up with a great business plan, you will end up looking at every aspect of your business’ finances. Therefore, you should be able to identify areas you can improve upon. The better prepared you are, by having all the possible documentation required, the more likely you will be to get approval for your loan. So, if you’re looking to apply for a loan, check your folder twice for these necessary documents!