Applying For A Loan: List of documents

Many entrepreneur rely on their own funds for the initial phases of starting a business; however, when that is not enough to make ends meet, loans are usually next in line. There are a number of documents which will be required for any small business loan application. The following list gives an overview.

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How to apply for a small business loan in 10 easy steps:

The application process will differ for each loan program and often the process itself can be quite intimidating. However, if you are well prepared and fully informed, it does not have to be. 

List of documents for your small business loan application:

1. Personal Background

This includes information such as your personal address, your name(s) as well as the name of the other owners of the company (should there be any), criminal record, educational background, Taxpayer ID Number, etc.

2. Resumes

Especially for loans that are intended to fund a new business, some lenders will required a resume to prove management or business experience.

3. Business Plan

A detailed business plan is an essential part of every new business or company. A sound business plan often includes an executive summary, financial review, organizational plan, sales and marketing strategies, as well as general company background and experience. An important aspect for the credit institute is especially a complete set of financial statements, including profit and loss, cash flow and a balance sheet.

4. Personal Credit Report

As part of the process, your lender will obtain your personal credit report. It is often advisable to obtain your own credit report prior to applying for a loan, in order to check for and clear up any inaccuracies or outstanding debt.

5. Business Credit Report

If you already have an operating business that has acquired credit, then you may also have to submit your business's credit report.

6. Income Tax Returns

Most lenders will require your to provide a copy of the company's tax returns for the last three years. This also includes the guarantors' tax returns for the last three years.

7. Financial Statements

Like the tax returns, you will most likely be required to submit your business's financial statements as well as interim financial statements for the current year. Moreover, guarantors will need to provide updated personal financial statements.

8. Bank Statements

Many loan programs required one year of personal and business bank statements. It is important that these are kept separate.

9. Collateral

If the loan being applied for is a secured loan, the borrower will also need to provide information about the collateral being offered as security for the loan. Collateral can include personal real estate, property, business equipment, accounts receivable, inventory and supplies, or business real estate. However, the requirements for loan programs with regard to collateral vary greatly. Having a clear and strong business plan and financial statements may help you avoid having to provide collateral.

10. Legal Documents

Depending on the requirements of the loan you are applying for as well as what type of legal structure you have chosen for your business, you may be required to submit some of the following documents:

  • Business licenses and permits
  • Articles of Incorporation (as would apply to a Corporation)
  • Contracts with any third parties
  • Franchise agreements
  • Commercial leases

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