Waiting for a loan approval can feel like an eternity. The good news is that there are things you can do to expedite the process. Preparing all the documents you will need is one way to move the process along. Here are some documents to collect for your application:
- Business profile. This document describes your business, including annual sales, number of employees, length of time in business, and ownership.
- Business plan. A business plan is particularly important for new businesses, as they lack a track record for lenders to go by. Your plan should convey all important facts about your business in a concise manner. Your business plan may range anywhere from 5 to 20 pages, plus financial projections.
- Loan request. This should detail the amount of money requested, how the loan funds will be used, the type of loan, and the amount of working capital you have on hand.
- Collateral. Describe what will be used to secure the loan, including equity in the business, borrowed funds, and available cash.
- Personal and business financial statements. You will likely need to provide financial information for anyone who owns 20 percent or more of the business, including owners, partners, officers, and stockholders. Lenders will want to see a complete schedule of current debts with balances, payment schedules, maturity, and collateral used to secure other loans.
You may also be asked to provide:
- Balance sheets from the last three years.
- Profit and loss statements from the last three years.
- Cash flow projections indicating how much cash you expect to generate.
- Accounts receivable and payables aging, breaking your receivables and payables in to 30-, 60-, 90- and past 90-day-old categories.
- Personal financial statements listing all personal assets, liabilities, and monthly payments, as well as your personal tax returns for the past three years.
Lenders may also require additional documents during the loan process, such as:
- Articles of incorporation
- Proof of taxpayer ID number
- Legal descriptions of real property
- Equipment inventories with serial numbers
- Proof of insurance for collateralized items
There are other documents that may improve your chances of getting approved. Some of those are:
- Letters of intent from commercial accounts stating their intent to do business with you
- Market data showing demand for your type of business
- Research on competitors, including information on their customer base and price points
Collecting this additional information is a good idea, but don't submit it with your application unless your loan officer requests it. Too much information can be overwhelming and actually hurt your chances of getting a loan.