Business is booming. That’s a good thing, right? Not if you can’t keep up with demand. Maybe it’s time to expand. But that means a visit to your local lending institution to secure the funds. For some, that’s a daunting experience, especially if you’re not prepared. So, how do you get a loan?
While every lending institution has its own requirements, the Small Business Administration has identified typical items that will be required for any small business loan application:
- Personal background – Most loan applications ask for information such as previous addresses/names, educational background, and criminal record.
- Resume – Evidence of business or managerial experience.
- Business Plan – Should include a complete set of financial statements, including profit and loss, cash flow and balance sheet. May include forward-looking projections.
- Personal Credit Report – Lender will request one, but you should request one before submitting the application to identify/correct any inaccuracies or blemishes.
- Business’s Credit Report – Like your personal report, review your own business’s credit report to identify/correct anything that might hurt your chances.
- Income Tax Returns – Most require personal and business returns for the previous three years.
- Financial Statements – May ask for personal financial statements from any owners with more than a 20 percent stake in your business.
- Bank Statements – Most require one year of personal and business statements.
- Collateral – Prepare a collateral document that describes the cost/value of personal or business property that will be used to secure a loan.
- Legal Documents – May include business licenses, articles of incorporation, third-party contracts, franchise agreements, and commercial leases.
In addition to these documents, be prepared to answer questions such as: Why are you applying for the loan? What will the money be used for?
Need more information? Go to SBA.gov.