Once you’ve decided that your small business is ready to continue growing, you may require a loan to get your company moving in the right direction. Before you seek out a lender, it’s important that you know what you’ll need to receive a small business loan, as there are certain requirements that your provider will expect from you prior to considering your company. Don’t start off the process on the wrong foot. Gather everything you need and make your loan request with confidence. Cross these five requirements off your list before you apply:
1. Have application information ready to go
While each application will be different depending on the program or lender you’re requesting your loan from, there’s certain information that most providers are going to request. A lot of the questions that will be asked are simple, but the process will be easier if you have an idea of what you’re going to write beforehand.
According to the U.S. Small Business Administration, the majority of loan applications will start off by asking you why you’re applying for a loan, how the funds would be spent, who your suppliers are and if you have any existing business debt. Your lender may also ask who your partners are and request information on the members of your management team. Be ready to give a little bit of personal background information as well.
2. Establish a legitimate business plan
Chances are, if you don’t have a solid business plan in place, your lender isn’t going to take you seriously. The more details you have, the better your application process will go. Have an in-depth description of your products and services, what makes your product successful in your market, your projected revenue and a list of goals you’ve set for your business accompanied by strategies to achieve them.
If you’ve never put together a business plan before, there are tools out there to guide you as you create one. For example, you can register on the SBA website to receive templates for writing your plan.
3. Bring a recent credit report
You should have done your research to prepare for submitting your FICO score, which is a summary of your credit risk that lenders take into consideration when determining factors such as whether to extend credit. There are free online tools you can use to find out what your FICO score is.
In addition to bringing your business’ credit report, have a summary of your personal credit history – your lender will want to assess your financial performance both as an individual and a business owner. If you have any debts, do your best to fix your credit scores before applying for your loan.
4. Update your resume
The more evidence of management and business leadership experience you’re able to provide, the better off you’ll be. Lenders want to make sure that the business owner they’re loaning to has the talent and expertise to run a successful company. A good resume will list the goals you’ve met and any accolades you’ve earned. It’s also a good idea to get recommendations from colleagues or client reviews as a representation of your work ethic and dependability.
5. Put together financial statements
Most loan programs require that business owners submit one year of their business’ financial statements. You can include your projected financial statements as a part of your business plan or separately. Your statements should be comprised of your cash flow, bank statements, a balance sheet and income statement. Your financial statements are essential requirements to getting your loan request approved, as they represent the revenue your business is earning and the expenses that are going out. These forms also help you and your lender determine your profit margin – if it’s small, you might want to consider applying for a microloan.
If you’re thinking about applying for a small business loan, RapidAdvance will cater to your specific needs to get you the funding your company requires in three easy steps. All it takes is filling out the application form, waiting 24 hours for approval and, if approved, receiving your funding within three days. This painless and streamlined process will ensure you have the time and energy you need to focus on getting the capital your business requires to continue on its path to success.