Do you want to grow your business? Whether you want to make a hire or expand your product line, a business loan could be what you need. However, applying for a business loan is not only time consuming but also hectic, and nothing is assured. Since you are a busy entrepreneur, the last thing you want to go through tedious processes that will consume your time.
To make everything easy for you, we have broken down the business loan application process.
Build up a case for your small business
The first question that lenders will ask you is: Can you tell us something about your business?
Before you apply for a loan, you will need to prepare all the documents that will be needed and data that will explain what you do–and show that you are doing it well. Lenders want to feel comfortable that they are giving a loan to a well-planned, legitimate and reputable business, owned by an entrepreneur who is good at keeping records and has plans for the future of his business. If you make the lenders feel better about you and your business, they will most likely give you a loan at better term.
For example, you will be required to present a photocopy of your national identification card, passport or driver’s license. You will also be asked to provide a license for your business and proof of ownership, number of employees you have, type of business entity and industry. You may also want to prepare a business plan.
In order to convince the lenders, you must tell the story behind your business.
Prove that you can take a loan
Another question that lenders will want you to answer is: If you are given the loan, will you pay it back?
In this case, you have no choice other than to convince the lenders that you will certainly pay back the loan.
- Your business’ Finances
To show the lenders that your business can pay back the loan, you will need to provide the necessary documents
Most lenders will want to see your balance sheets, recent business tax returns, and profit-and-loss report, and bank statements. Using these financials, lenders will be able to know how you manage your business’ finances.
Last but not least, lenders will want to know your collateral valuation for any inventory, equipment or real estate. In the event that you are unable to pay back the loan, the lender will want to be sure that they can get back their money in some way.
- Your borrowing history
When applying for a small business loan, the lenders will want to know a lot about you as an individual. That’s the main reason why they may ask you to provide your personal tax. If you can put food in your family’s table, why should they give you a business loan?
Lenders will also want to look at your personal credit score. You may want to improve your credit score before applying for a business loan.