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The process of applying for a business loan is exciting. There are a few things to get in order to ensure that things move along smoothly, without delay.
Here are 5 key things to prepare before you contact a small business lender:
- A Comprehensive Business Plan
Not every prospective lender will read your business plan from cover to cover, but it’s a necessary document in the process to acquire a small business loan, and it helps formalize a vision for your business. A comprehensive business plan will help you quickly articulate your goals and operating plans and prepares you to succinctly answer questions and discuss your future plans.
There are many sections within most business plans, but if you choose to focus on one above all others, make it the area where you describe your leadership team structure. This is often the most compelling part of a business plan, as it describes the individuals responsible for helping the business succeed.
- A Clear Loan Purpose
It’s certain that any small business lender will request clear explanations as to exactly what the loan proceeds will be applied toward. Will they be directed to help stabilize cash flow? To attract and train new employees? Perhaps you will use them to expand to a new business location?
A business plan without a clear and specific purpose for loan proceeds is cause for concern for small business lenders. It can allude to disorganization and weak vision.
Before you apply for a loan, consider how your ideal loan would be structured. Be prepared to answer questions about how much money you are seeking and your ideal term and interest rate. It would be rare to receive the precise structure you outline in your business plan, but being prepared helps you evaluate all your options strategically.
- Organized Financial Statements
It’s crucial to have all important financial documents and records in order before applying for a loan. You should create an overview that describes the financial history of your business and where you project it to be in the future. Organize your financial documents (a balance sheet, income statement, past tax returns and all bank statements) to provide a complete picture of your financial health.
In addition to preparing an overview of your current and past finances, you should take time to establish a set of financial projections that illustrate your future expectations. These projections should provide the framework for the financing you are seeking and how it will be used.
- A Current Credit Report
It’s always recommended to monitor your company’s credit and to pull an updated report before applying for a loan. Once you have your report, prepare explanations for any questionable or negative areas that a lender may question. Any small business lender will require a thorough explanation of your credit history financial standing.
- All Relevant Legal Documents
The legal structure of a business might not always be clear, but take time to gain a thorough understanding of how your business is legally organized. This includes things like its legal name, its members, etc., which should be included in the articles of incorporation. It is also a best practice to obtain copies of any existing commercial leases, franchise agreements and other binding documents as part of your loan preparation.
It can take some time and organization to prepare for a loan application, but this process is helpful for any business owner. It can serve as a valuable refresher in all key areas of your business and sets you up for the best chance at obtaining your desired funding. Our lending partner Fundation simplifies the small business lending process to make it seamless and efficient. With your permission, the Fundation online application system can even pull legal and financial documents for you, furthering simplifying your loan application process.
Fundation guides you through the loan application process so that the focus remains on the most important part of the small business loan application—finding a way to get you the growth capital you need to build your business to its highest potential.
Are you looking for a small business lender with a vested interest in your success? Contact our partner Fundation today and complete its streamlined application process in just 10 minutes. Fundation will work with you for the life of your loan, offering superior customer service and an innovative approach to business lending.