When you need financing as a small business owner, there are many options for you. Many owners decide to use a loan to get funding so they can have the capital to move forward with business as well as build their business credit with on-time repayment. If you’re considering a loan, you will need to make sure you have all the information required in order as part of your application process. Here is the basic information you need to prepare your loan application.
Traditional Lender
While the specific requirements for a traditional lender will vary based on the institution and the application process, there is basic information the lender will need to process your loan application. This typically includes:
- Business financial statements
- Business credit report
- Building lease
The lender may also request your personal financial information, including your personal credit report, as part of the application.
Alternative Lender
Many businesses seek financing from alternative lenders because their requirements may be more flexible compared to traditional lenders. In addition, the application process is often faster. Typically, alternative lenders require:
- Financial information
- Bank statements from a limited time frame (usually three to six months prior)
Some alternative lenders may check your business credit, while others will not. Typically, these lenders do not include your personal credit in the credit check, even if they use your business credit score as part of the application.
SBA Loan
SBA (Small Business Association) loans are specifically designed for small businesses and entrepreneurs. Since these loans are guaranteed by the government, the requirements may be more rigorous compared to other financing options. Most often, lenders require:
- Tax returns for the last two or three years (which may include business and personal)
- Financial statements for the last year or two
- A year-to-date financial statement
- Building lease
- Business credit report (most lenders require a 680 or higher for SBA loans)
While these are the basic requirements, there may be variations depending on the type of SBA loan and the financial institution offering it.
Whether you are a new business owner or need a little extra funding to take your business to the next level, a loan may be a good option for you. Having the information prepared means you can expedite the process and get your loan approved more quickly.