by Debi Enders
When the time comes to apply for a loan, many small businesses aren’t sure what they need. While every lender’s standards are different, most want the same basic information:
1. A completed loan application. They expect you to address:
• Why you are applying for the loan
• How the funds will be used
• What other business debt you have and who your creditors are
• Who is on your management team.Generally, anyone with a 20% or more stake in the business must be listed on the application.
2. Business financial statements. This includes a profit and loss statement (P&L) summarizing your business revenues, expenses, cash flow and a balance sheet for the two most recent years. If your business is new, you may need to provide a business plan with P&L projections. Also, your lender will probably check the credit report for your business.
3. The past two years’ tax returns. That includes both your personal returns and your business returns.
4. Other documents. If you don’t have a current relationship with the lender, you may be asked for bank statements, third-party contracts and other business documents that provide evidence of a solid financial record and strong assets.
The bottom line: When you need a loan, come prepared. It will make the process easier and help show your banker that you are ready, willing and able to do business.
Debi Enders (debi.enders@commercebank.com) is vice president, small business banking at Commerce Bank.
Submitted 7 years 339 days ago