How to Get a Business Loan

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Ready to apply for a business loan? Whether or not you get the loan depends on whether you can convince the lender you're a good risk, and that will be based on the documentation you provide. Here's a run down of the items most lenders will need to see.

business loans
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Access to capital is an ongoing need for growing businesses. Whether you want to hire several more employees, open a new location, increase production, or develop new products, a business loan can provide your small business the money it needs to expand. 

How successful you are at getting the loan will depend on how successful you are at convincing a lender that you'll be able to repay your loan on time. That decision will be based on a number of factors including the business' income and credit record, your business plan, the nature of the business, your industry, the business experience of the owner(s), the personal credit of the owner(s), your collateral, and the lender you choose.

To evaluate those factors,  lenders will ask you to complete a loan application and provide a variety of information and documentation. Although the specifics will vary from one lender to another, you may need to provide some or all of the following:

Loan request details:

• Why you want the loan
• How much you need
• How the money will be used
• Amount of time needed to repay the loan
• What other business debts you have

Advertisement: Get business loans faster, easier from OnDeck Capital. Apply now.*

Business Plan
This would include a description of the business, description of the products and services, marketing projections (and how you plan to achieve your goals), resumes of the principals in the business, and financial projections

Legal Documents

Business licenses, incorporation documents, patents, commercial leases, franchise agreements, or other legal documents related to your business.

RELATED: How to Get a Small Business Loan When the Bank Says No

Financial Statements

Profit and Loss Statement (also called an Income Statement) for an existing business

Balance sheet

Cash flow statement

Accounts receivables and payables reports (for existing business)

Tax Returns

Both business and personal tax returns from the last three years may be required.



Credit Reports

The lender may require credit reports both for the business (if it's already established) and personal credit reports for the owner(s).

RELATED: Where to Get Money to Start a Business

Collateral 

Collateral is something of value that can be used to repay the loan if the business defaults on the payments. That something of value would be something the lender would be able to sell to recoup its losses if the business can't pay off the loan. The "something" might be inventory, equipment, bank accounts, or even your home.

Gathering all of the above information and documents before you approach a lender, will help you speed the loan application process. It should also help you get a clearer vision of your business needs and the businesses' ability to repay the loan.

*Note: BusinessKnowHow may earn a commission if you apply for a loan from OnDeck Capital

© 2017 Attard Communications, Inc. All Rights Reserved. May not be reproduced, reprinted or redistributed without written permission from Attard Communications, Inc.

About the author:
Janet Attard is the founder of the award-winning  Business Know-How small business web site and information resource. Janet is also the author of The Home Office And Small Business Answer Book and of Business Know-How: An Operational Guide For Home-Based and Micro-Sized Businesses with Limited Budgets.  Follow Janet on Twitter at http://www.twitter.com/JanetAttard.

 
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