Applying for a Business Loan
When applying for business loans, the documentation you provide is like a sales tool and if it is put together correctly there is more of a chance that the lender will approved your business getting a business loan. Your documentation will also have to convince the lender that you will pay back the loan as you have promised. Simply put, the bank is a money-lending business and they will need evidence of your businesses stability and security for them to lend your business the money.
When applying for small business loans, here is the documentation needed.
- Cover sheet—this page just needs to state that it is a loan application submitted by the name of the owner of the business, name of business, address, phone number, and the date.
- Cover letter—this is a personal business letter to the banker requesting that they consider your application for an installment loan or line of credit. In the second paragraph you should describe what type of business it is, such as sole proprietorship and what type of goods it sells and in the last paragraph you want to indicate future plans for the business
- Table of contents—this makes it easier for the banker to find the information and to see what documents are included
- Amount and use for loan—this page will tell the bank the amount of the loan you are applying for and how you will use it.
- Description and history of your business—this page will go into more detail about your business, including future plans
- Management team—this tells the bank who works in your business that will oversee an important part of your business. It could be all your employees, just the manufacturing team, outside consultants, etc. Each person’s name and responsibility should be listed and if it is appropriate you can describe why the person is the right choice a particular job.
- Market information—this is where you tell the bank what your service or product line and the market it is directed too. You also need to describe how you targeted your market, how successful it has been, and future plans to add new services or products.
- Financial history—for business loans the bank will want to see your profit and loss statements and balance sheets. Since your business is new you will need to use projections so the bank can compare these to the norms in the industry of what your business offers.
- Financial projections—this will include three documents that will show just how the business with the loan requested will make sufficient profits to pay off the business loans Central Coast. The documents include cash-flow statement, balance sheet, and income statement, which your accountant can help prepare.
- Collateral—this includes cash reserves, equipment, inventory, receivables, etc that you can offer to prove you have backup to repay the loan.
- Personal financial statements—business loans for a new business need to also have a personal guarantee for any loan.