Is your small business ready for a boost? In order to fund new projects, hire more staff, and branch out into new industries, you’ll need plenty of working capital. Many business owners utilize bank loans to get more cash flowing in their business. If you’re thinking about applying for a business loan, keep this checklist of documents you’ll need on hand as you prepare.
Credit Report
If your business has been up and running for a while, you’ll need a business credit report to show potential lenders proof of your ability to pay off debts. A solid credit score puts a lender’s mind at ease since they can trust that you’ll pay back the money they lend you.
If you’re new to the world of business, use your personal credit report. The idea is the same. You must demonstrate your creditworthiness and present yourself as a financially responsible business owner.
Income Tax Returns
Do you keep records of your past income tax returns? Hint: you should. Many traditional lenders will require both your personal and business income tax returns from the previous three years. If your business has not been operating for three years yet, enlist the help of an accountant to create projections of what your business income tax returns might look like.
Business Plan
One of the most important components of a loan application is a detailed and thorough business plan that shows lenders how your business operates. A high-quality business plan includes:
- Market research
- Information about you and your team
- Sales projections
- A strong mission statement
Legal Documents
Depending on the type of business you conduct, you may need to provide a variety of legal papers. These include but aren’t limited to:
- Any licenses required for you to conduct business
- Commercial leases
- Contracts you have with third parties
- Articles of incorporation
You can add these documents as an appendix to your business plan or present them separately.
Loan Application Form
Your potential lender will provide a form for you to fill out the information they need. Compared to the other items on this checklist, it’s a relatively straightforward piece of paperwork. They’ll ask for some personal information about you, including contact information for you and other senior team members.
Then, they’ll ask basic questions. Why are you applying for this loan? How will you use the money? If you’re buying equipment or inventory, who are your suppliers? Much of this information should also be in your business plan, but fill out the form completely anyway.
When you’re ready to start or expand your small business, consider applying for a business loan to get the working capital you need. These are the main documents you will need during the application process.
