Information You Need When Applying for a Small Business Loan
When applying for a small business loan, it’s best to follow the Boy Scout motto, “Be Prepared.” Not knowing what you need for the application process can result in your small business getting turned down for a loan it may desperately need. Not to worry though, spending a small amount of time putting together a business plan, gathering financial statements and detailing your personal experience will go a long way toward securing approval and giving your business the influx of capital that might make all the difference.
Creating a Solid Business Plan Is Critical
Lenders want to understand your business and get a specific idea of how you plan to generate revenue. If your business isn’t around long, it will be difficult for them to get their money back. A carefully constructed and detailed business plan will show your lender that you know your industry and have a clear path to success.
A good business plan should contain several important elements, beginning with a concise description of your operations as well as your goals and objectives. You will also need to outline the products and/or services that your business is offering and how these make you unique compared to your competition. Other items you should cover include market research, operations, expansion opportunities, management team experience and a financial forecast.
Have Your Tax and Bank Statements Ready
While a sound business plan is an important part of getting approved for a small business loan, you also need to come prepared with appropriate financial statements and documentation. In most cases you will need to show your previous three years’ worth of personal and business income tax returns. Additionally, it is likely you will be asked for personal and business bank statements from the previous year. These are a very important part of the process, as they are used to verify income and further demonstrate your ability to repay the loan.
Personal Background and Experience Can Make the Difference
Be ready to answer questions about your own background and experience as well, including where you have lived, formal education or training and past work experience. Lenders will also want to know whether you have had previous experience in the industry in which your business competes, as this is a key indicator of future success.
Put your lender at ease and give yourself the best opportunity to get approved for your small business loan, when, like a good scout, you come prepared. Spend the appropriate time to gather these items and show that you mean business!