2015-11-11 16:49:03 Loans English If your business is looking to get a small business loan, you need to know how to prepare. Learn what information a lending institution... https://d2yxjugd6jl4bj.cloudfront.net/wp-content/uploads/2015/11/08233129/2015_11_10-small-am-what-documents-do-i-need-to-get-a-business-loan.jpg What Documents Do I Need to Get a Business Loan?

What Documents Do I Need to Get a Traditional Business Loan?

2 min read

The documents needed to get a business loan from a traditional bank depend on several factors, including the type of financing sought, the size of the loan, how long you’ve been in business, and the profitability of your business for the past two years, among many other things. Traditional banks require more documentation–generally speaking–than online lenders.

Background Information

Lenders seek information similar to what you’d fill out on a job application, such as any prior names you may have used, previous addresses, educational and business background.

If you’re seeking startup funding and you’ve never owned a business before, , lenders often like to see proof that you’ve had managerial experience and/or experience in the same industry.

Your Business Plan

Lenders often request a business plan, which should include the following elements::

Your Personal Credit Report

Get a free copy of your credit reportReview your reports and correct any mistakes right away. If your personal credit score is below 700 before applying for the loan, work on improving your score.

Your Business’ Credit Report

The lender will also want to check your business credit report. You can check your report through D&B, Experian or FICO SBSS, and correct any errors.

Income Tax Returns

Lenders generally require copies of both your personal and business income tax returns, including schedules, for the past three years.

Financial Statements

In addition to what’s included in your business plan, some lenders may want to see your projected financial statements in a separate document. Generally, lenders require monthly or quarterly financial projections for the first year, then quarterly and/or yearly projections for the next four years.

Bank Statements

Typically, you’ll be asked to provide both personal and business bank statements for the past 12 months.

Documentation of Collateral

Collateral is business or personal property you’re willing to pledge as security for repaying the loan. You should be prepared to show that you own the assets and that they are properly titled and unencumbered.

Other Contracts and Legal Documents

  • Business licenses and registration
  • Articles of incorporation
  • Leases for commercial real estate or business equipment
  • Franchise agreements
  • Contracts with third parties such as clients or suppliers

Before submitting a loan request, ask the about how the lending institution views lending to startups, to companies in your industry, and/or if they use any other parameters when considering small business loans.

Once you’ve identified a potential lender, ask for a complete list of documents they want. It can save time if you submit everything at the same time once you’ve compiled all the information.

Gathering documents for a loan application process can take some time. In addition to being required to apply for a loan, the exercise can also be useful for a business owner. Seeing the details of a business in a format that is probably different than what is seen on the day-to-day operations level can be empowering and yield additional insights about your business.

Rate This Article
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.

Help Your Business Thrive

Get our newsletter

Thanks for signing up!

Check your inbox for a confirmation email.*

*Check your spam folder if you don’t see a confirmation email.

Related Articles

Is Your Record Keeping System Wasting Time (And Money)?

Bills, Invoices, Purchase Orders, Receipts, Contracts… the amount of paperwork a business…

Read more

106 Business Tools for Freelancers, Consultants and Side Hustlers

For freelancers, productivity is an asset. The more efficient you are, the…

Read more

When Should Small Businesses Engage Legal Counsel?

When growing your business, hiring an attorney is the last thing you…

Read more