One of the best ways to invest in the financial future of your business is to apply for a business loan. The problem for many business owners is that the loan application process can be pretty confusing, especially if it is something you’ve never tried before.
Depending on the lender you choose, there can often be quite a few documents that are necessary for your small business loan application. If you cannot provide these documents or the documents contain incorrect information, you may find that you get denied the loan you need. Here are some documents you most assuredly will need to apply for a loan.
Credit Report
This document does a great job of showing a potential lender your history and ability to pay back a loan on time and in full. Having poor credit does not mean you cannot get a loan, but it simply means you’ll most likely pay higher interest rates and be able to get only a smaller amount for your loan.
If you need a credit report for your business, going to one of the business credit bureaus such as Dun and Bradstreet is an excellent place to start. When you get your report, this is also a great time to correct any mistakes you find on your credit report to ensure your score is as high as possible.
Monthly Statements for Your Bank Accounts
Most lenders are going to want to review all of your bank account statements. These statements help a lender to see the legitimacy of your business. Statements also help lenders assess your current and potential future cash flow expectations.
When a lender sees that you are earning revenue and managing your expenses, you are much more likely to receive a loan. Because of this, make sure your financial statements, in conjunction with your bank statements, paint the best picture of your business.
Tax Returns
Your tax returns are a great way for a lender to see how your business has performed in the past. If you are a new business, you should work with an accountant to create a projection of what your tax returns may look like in the future. Think carefully when you file your taxes because having too many deductions may be an issue for any potential lender.
If you run your business well in a detailed fashion pulling together these types of documents for your small business loan application should be simple. The clearer the picture you paint to a potential lender of your business, the better chance you have of getting an excellent loan for your business.