For your small business, you are the only executive. You are the CEO of the business. The Chief ‘Everything’ Officer. And since you are the Chief ‘Everything’ Officer, as the name suggests, you will have to do everything and this includes taking a loan for your small business. You have to be a hundred percent ready for everything. It can take a while, particularly if you’re borrowing from a bank. You need to be cautious while applying for a business loan. To speed up the process, you need to gather the checklist for the loan. You need to gather and organize paperwork as well. This will help in speeding up the process.
Getting a business loan can be a hectic process and it can be such a problem creating matter but all you need to do is go as per the checklist and the process will become easier for you. It will get you prepared and stay organized during the loan. It will also save you time and prevent you from hassle. It will be a boon for you if you do it.
The checklist below is designed keeping in mind the small business loans. Have a look at the checklist below to ease the process and help you get through.
A. Informational Documents
- Basic Personal Information
The first page of your business loan application will ask for your basic personal application. You should have all the information beforehand. There must not be any problem during the time when you are filling the form.
- Basic Business Information
Information like business tax ID, business location, the number of employees is next to the personal information. You may also have to provide a copy of the lease agreement.
- Basic Legal Documents
The lender may ask you to produce your past legal documents like business formation documents, business licenses, records of pending legal documents, previous bankruptcy records and contracts with other businesses.
- Personal and Business Credit Reports
Your credit score and credit history constitute a major part of your ability to get a small business loan. It is helpful to get your business and personal credit reports so that you can estimate your creditworthiness.
- Your Resume and the Resume of Your Management Team
If you are starting a business or acquiring a business, lenders want you to have a minimum of 3 to 5 years’ experience.
B. Financial Documents
- Last Three Years’ Business and Personal Tax Returns
Tax returns tell the lenders your ability to pay back the amount of credit. They also want your tax returns because they want to know if you are able to pay back the loan.
- Current Years’ Balance Sheet and P&L Statement
Balance Sheet and P&L statement are a part of the business plan. They also tell the lenders the creditworthiness of the and financial position of the business over the last few years. Accounts receivable and accounts payable should be included in the balance sheet. As with bank statements, if there is something negative in these documents, be prepared to discuss that with the lender.
If the lender requires collateral, take stock of the business assets and identify their value. If you are willing to pledge personal assets as well, you should document their value as well.
C. Future Business Plan
Including a good business plan with your small business loan application shows the lender that you are not there for short term gains but long term benefits. What to include in a business plan includes its own checklist. It should definitely contain your target market, competition, executive team, and business model. You should also provide the financial projections for a minimum of 3-5 years.
There are several questions that the lender is going to ask you. You should be ready to face them and be ready to answer them as they are thrown at you.