Getting Ready for a Bank Small Business Loan
Applying for a business loan is not a one-step process. However, there are some steps that you can do to prevent unnecessary delays and speed up the processing of your application. In this article, let’s take a look at the paperwork you need to prepare and submit to expedite the approval and release of your small business loan.
Business Plan. Your business plan must be presented in a way that a potential lender can be convinced that your company is worth the financing assistance that you seek. Therefore, your plan must not only include all the important details about your company such as the type of business you own, how long you have been in the industry, the number of employees you have, the owners/co-owners of the company, etc; but it must also include your projections for your small business.
Putting together an efficient business plan will require time and effort but it can also be the deciding factor to your loan’s approval. If you are not sure of how to create a business plan, do your own research from the internet and ask professional advice from a business consultant or from another experienced small business owner.
Business Loan Proposal. This written request should stipulate the amount of financing you need as well as your purpose for obtaining a loan. How do you plan to utilize the funds in case you are granted approval? Furthermore, how do you plan to pay back the loan?
Collateral. Typically, banking institutions and lending companies offer secured loans for small businesses. Hence you need to prepare in advance the property you plan to use as collateral for your loan. Aside from your home, other assets which have considerable value can be used as collateral as well such as business equipment, vehicle, bonds or stocks, etc.
Personal Finances. As the owner of the small business, your personal finances (assets, liabilities) will be taken into consideration along with your personal tax returns for the past three years.
This means your credit report will be checked so it’s best to order a copy of your report at least six months prior to submitting your business loan application. Doing so will give you the chance to correct errors or incorrect charges in your report (if applicable) which can pull down your credit score.
Business Finances. If you own an established business, you will be required to submit copies of your financial statements or balance sheets for the past two years or so. Coordinate with your business accountant ahead of time to avoid unnecessary rushing.
Business credit history. For established small businesses, corporate credit history will have a large bearing as it will show how you have been managing your debts and repayment obligations with other creditors, insurers or suppliers. Needless to say, a higher Paydex score will not only win your lender’s approval, it will also give you the advantage when negotiating for a better deal.
Irish Taylor is a bussiness loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to business start up, SBA loans and Unsecured loans.
Copyright 2010.
Related Article: Borrowing Money To Build Your Business
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