In case you want to start, expand or save your business, you can avail to some of the best loan programs out there. Banks and lending corporations provide small to big loans custom-tailored to your needs. In order to pass a loan application, you should remember these common requirements lenders ask whenever you apply for a business loan:
A bank statement is one of the most required documents if you want to apply for a loan. Lenders can use your bank statements to assess your transactions and your remaining balance. They will also check if you are still capable of paying debts or credits.
A balance sheet is a snapshot of the financial health of your business. It will determine your business’ nature, function and condition. How you manage your assets and liabilities are also stated in this sheet. Lenders can assess if you are good in financial management.
Business Tax Returns
Lenders need to check the business income, deductions, and credits. Further, the lender can evaluate if you are a good tax payer in which you annually file your tax returns. Some lenders also ask for personal tax returns.
Length of Operation
The length of the business operation can also determine the capability of the business to earn. Lenders should know how established and trusted your business is so that they can decide if they will invest on it.
Personal Credit Score
Through this, lenders can identify if you are responsible at managing your personal finances. A credit score above 700 may attract lenders, while 600 below may be difficult for you to secure an affordable loan.
Use of Loan
Lenders have the right to know what the purpose of the loan application is. You should be transparent if you will use the money for renovation, additional stocks, relaunching and other business purposes.
Size of the Business
The lender shall also know the size of your business. It can be identified by the number of employees – part-time and full-time workers and their payroll records. If you are applying for a small business loan, you need to prove that your business is indeed small. Lenders will also ask for the payroll records for the last 6 months to prove your claim regarding the size of your business.
Business Licensed & Permits
If you are an existing business, you must present business licenses and permits to validate the existence of your business. You can also show some relevant business loan approvals from previous transactions to show your credibility in accomplishing loan responsibilities.
This is one of the most important requirements. Lenders would like to know the assets and properties you are willing to lose if you become unable to fulfill your loan payment. It may be the business itself, real estate property, equipment or inventory you use to make your products. Hire a certified appraiser to conduct valuation method and process on your collateral documentation.
Do you have all these requirements?