Applying for a business loan can be a little bit intimidating, especially if you are a first-time business owner. When you are in the midst of the application process, your prospective lender will expect to receive a variety of information from you. To ensure the success of your application, there are several pieces of key information you should include in your loan package.
Prior Financial Statements
Your lender needs to see financial statements that illustrate your business’ financial activity. This can help him or her determine how likely it will be that you will be able to fully pay off your business loan. In most situations, lenders like to see at least a year of detailed financial information, as well as a profit and loss statement. In addition to prior statements, you should also include statements that outline what kind of profits your business is expected to retain in the future.
Personal and Business Information
Most lenders want to know about your business, but they also want to know more about your personal background. This is extremely true if you have been running your business for less than a year. If you are offered a loan and your business is fairly new, your lender may ask you to sign a personal guarantee.
The lender you are working with will need to know what other ventures you are financially involved with. For example, if you own another business on the side, your lender would need to know this information. This is extremely important if you are trying to acquire a business loan from the Small Business Administration.
In addition to your business’ financial statements, your lender will likely want to receive information regarding your business’ taxes. Be prepared to provide at least three years of income tax returns. You may also need to include your personal tax information for the past three years as well.
In order to determine whether or not they want to lend to you, a prospective lender will need to know if you are renting office space or if you have a lease on any business equipment. When you apply for a loan, make sure that you provide your lenders with copies of these lease agreements in your loan package.
Keep in mind that not every lender will want, or even need, all of this information. However, it is best to have it just in case. By having the right information at the right time, you will be more likely to receive approval on the business loan you applied for.