How To Apply For A Small Business Loan
Knowing how to apply for a small business loan will greatly increase your chances of being approved for one. A solid small business loan package includes a lot of paperwork required by the lender to evaluate your loan request. You want your small business loan application to be presented at its very best, because one chance may be all that you have.
- Pick the appropriate format. You can use different formats for your small business loan package, however, make sure it includes industry-specific information. This will help the potential lender(s) understand your business and industry trends that affect its performance. Ask your potential lender(s) for advice on what format would work best for you.
- Gather the appropriate forms. Your small business loan package should include documentation such as the application, personal financial statement, personal history and financial statements, collateral schedule, and lobbying statement , as well as any other documents as required.
- Being your small business loan proposal with an Executive Summary. This summary should outline your business background, nature of the business, purpose and amount of the loan, repayment terms, how the loan will benefit your business and your repayment terms. The application forms will also contain most or all of this information.
- Include a business profile. Your small business loan package should include a business profile that contains information such as business type, location, product/service, customers, suppliers, staff size, competitors, company history and annual sales. Also include resumes of key staff.
- Be prepared to provide business financial statements for the last three years. You should also include a current statement no more than 90 days old, as well as documentation showing term debt and aging of accounts payables and receivables. If a new business owner, bring an income statement and project balance sheet. Make sure all your financial information is accurate and updated. Your chances for approval count on it.
- Provide business projections. Your small business loan application should include a detailed report showing future business projections for one year or until the business earns a positive cash flow.