Has your application for traditional business loans been turned down? Well, do not lose hope because there are still surefire ways on how to get a business loan. Do not put those hopes of starting or expanding business ventures on a back burner yet because there are commercial banks and lending companies who are more than willing to help. However, you must also keep in mind that there are still expectations. These expectations could be the key to successfully up your chances of starting or expanding a small business; thus, you have to meet them.
To meet these expectations, preparation is essential. Try to turn the table around and try to understand the information that the lender needs to know such as why he or she wants the loan in the first place, what are at stake and whether he or she would be able to pay the loan on time or not.
Preparation is indeed the first step on how to get a business loan and part of this is to gather all the documents that will support a business owner’s loan application. These documents are required to give the bank and lending companies an idea as to whether you are a risk worth taking or not. So here now is the list of documentation that you will need:
1. Resume. This document should include a comprehensive account of management or business experience. Experience is required by some lenders especially if the borrower wishes to start a business.
2. Business Plan. The plan should contain complete details of financial statements that include cash flow, profit and loss and balance sheets. You could check out the web for business plan writing tips and samples.
3. Income Tax Return. Includes personal and business tax returns for a period of three years.
4. Financial Statements. May or may not be incorporated on your business plan. It would be best to have this prepared, however, since there are programs that require them.
5. Bank Statements. Must include at least a year of personal and business bank statements.
6. Collateral. Some loan programs require this, others do not. Strong and credible financial statements and business plans can spare you from putting up collaterals. It is still highly advised though to get ready with a collateral document that can guarantee a loan.
7. Personal Credit Report. Before submitting loan application forms, secure a credit report from three major credit rating agencies. Flaws in these reports could serve as a red flag to lenders, however, so it is critical that you settle them first before applying.
8. Business Credit Report. Just like the previous, you should have your business’ credit report ready as well. Make sure that it is properly reviewed and free from inaccuracies before starting with the process as well.
9. Legal Documents. Some lender may require you to turn in other legal documents needed in other loan packages. Hence, be ready with the following documents, in order: business licenses and registrations, articles of corporation, copies of contracts with other parties, franchise agreement and commercial leases.
There are surely other tips that could help answer questions on how to get a business loan. But whatever they are, remember the basics of successful business loans which include preparation.