So you’ve decided to take out a loan to move your business forward, but where do you start? Even though business loans are like consumer loans, in that they are used to cover expenses you don’t have the cash flow on-hand to cover, unlike a consumer loan you will need to provide additional documentation when applying for a business loan, which can seem a bit intimating if you have never applied for one before.
This article will walk you through how to get a business loan by explaining the different documentation you will need to provide a lender. The most common types of documentation you would need to supply a lender to get the process started include:
- Business Documents
- Business Loan Application
- Personal Financial Statement
- Business Plan
Each financial institution will likely require additional documentation and information beyond this list based on their specific lending requirements, but this is a good place to start. Keep reading to learn more about each of these documents.
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This is a little open- ended depending upon what type of business you have, how long you have been in business, and if you have a prior relationship with the financial institution. Generally speaking you would need to supply the following items to your chosen lender:
- Business Tax ID Number
- Your Social Security Number
- Driver’s License or other government issued photo ID
- Legal paperwork showing when your company was formed
- Prior 2 years’ worth of your business and personal tax returns
To get the full list of business documents you can download our documents checklist below to get you started.
Business Loan Application
This document is used to gather both yours and your business’ basic information, explains what type of business loan and what loan terms you are looking for. The loan application also gives your lender permission to pull your and your business’s credit information to make a loan determination.
Personal Financial Statement
This document asks you to list your assets, income, personal liabilities, and any property you own personally. Your lender will use this information to determine what collateral may be available, along with your total financial worth.
This document is a detailed description of the organization’s objectives written out, usually when you start your business, and the steps that need to be taken for meeting the company’s goals. If you don’t already have a solid business plan, we strongly suggest completing this before you contact any lenders. While it is not a required document, your lenders will take you more seriously with a solid business plan in hand. If you need help writing your business plan, we recommend working with the SE Minnesota Small Business Development Center.
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Small business loans provide an excellent opportunity to grow your business. While the documentation required in order to secure a business loan can seem like a lot of information to gather, it is all information that you likely have readily available. If not, there are resources to help you pull it all together.