Be prepared if you want to get a business loan

Despite the recent bank bailouts, credit is still tight for small business owners. How can you improve the chances of obtaining a bank loan for your small business? Specifically, you will need to gather documents to provide the lender with a complete picture of your situation.

What documents do you need? The list may vary slightly from bank to bank, but typically you’ll be required to produce these five items.

  1. Business plan. Draw up a blueprint for business operations for at least one year. Demonstrate how you expect to use the loan proceeds.
  2. Cash flow projections. The lender will expect a detailed analysis of what you expect to earn and the manner in which it will be spent.
  3. Prior tax returns. For an on-going business, provide past returns for a minimum of three years. Owners of start-ups may substitute individual returns.
  4. Financial status data. The lender will likely ask you to list your main personal assets (e.g., home and cars) and outstanding debts.
  5. Credit rating report. A good credit history enhances your viability as a borrower. Obtain a credit report from one of the three major reporting agencies – Equifax, Experian, or TransUnion.

The next step is to convince the lender that you deserve the loan. Be prepared to give answers to some basic questions, such as:

  • How much money do you need?
  • How much do you intend to finance personally?
  • How will you spend the money?
  • How do you intend to repay the loan?
  • What type of collateral do you have to secure the loan?
  • What type of expertise do you have in your business?
  • How will you proceed if you don’t receive the loan?

Project an air of confidence. The lender will want you to show the leadership qualities that can sustain a business through both good times and bad. The interview is as much about you as it is about the business. For assistance in preparing your loan request, give us a call.

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