When applying for a small business loan, it is essential you do not overlook supplying potential lenders, such as banks, with the appropriate documentation to allow them to make an informed decision. The precise requirements vary depending on the nature and history of your business, but there are certain documents that can never be overlooked. First, you need a well-written and detailed business plan. In it, you should concisely explain the nature of your business, your short- and long-term outlook, and the market for your products and services. Second, you should provide a complete set of financial documents. These should include financial statements, tax returns, and bank statements for the past two years if they are available. For startups, an opening day balance sheet, first- and second-year projections, and initial startup costs should be provided. While it may be difficult to project future results, lenders expect you to be able to at least have a reasonable idea of the necessary capital and basic cash flow for your business. Spending the time and putting in the effort to prepare the documentation may not be as exciting as presenting a slideshow with your great idea to potential lenders, but showing them these details may help you convince them to invest in your project.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.