Essential Documents for a Small Business Loan

by | Oct 15, 2021 | Business Finance, SBA | 0 comments

In your company’s life cycle, odds are you will need additional money to help support expansion, a new project, or perhaps just more cash to weather a prolonged time. This is when small business financing will become a must for your company. And while working with a traditional bank is possible, it is more likely that you will be working with an alternative or online lender.

The good thing about getting funds through an alternative lender is that their criteria tend to be less stringent than more conventional financing institutions. Even those with lower credit scores can often find the financial help they need through an online or alternative lender. That said, there are certain documents and information that you will have to provide as part of your loan application packet. Having these ready and updated beforehand will make the process much easier than it otherwise would be. This article reviews a few of the most important documents you will be asked to provide when you apply for a business loan.

All Lenders Are Not the Same

When first realizing that you do need to go for small business funding, you want to do your homework for lender research. One lender may have one set of standards. Another may have a different list of criteria and consequent loan terms. Exploring your funding options and seeing what lender and lending solution may be best for your business is a crucial first step.

Once you’ve found the ideal lender for you, you want to ensure your documents are in order. What documents, you may be asking. While this will vary from lender to lender and loan to loan, some will require almost every loan you apply for. Below is a breakdown of some of the documents you will need.

1. Credit Report

The lender will ask permission to pull your credit report in almost every instance. Now, that is not to say that you will automatically be rejected if your credit is less than stellar. Some alternative lenders specialize in working with companies that may not have the best credit. However, check your credit report before applying for your business loan. Look for any errors and be sure to correct those. Also, look for ways in which you might quickly improve your score. You could start paying down debt. If you can get another credit card and thus increase your available credit amount, this could also help with your overall credit score.

2. Tax Returns

Depending on the lender, it can vary how many years back you may have to go. Generally, a lender will want to see 2-3 years’ worth of returns when applying for a business loan. It’s essential to make sure you are up to date on your taxes. They will likely ask to see both business and personal returns. Given your business structure, these may be the same, or you may have to submit both individual returns and your corporate taxes.

3. Articles of Incorporation

If your business is structured as a corporation, you will have to provide what are called the articles of incorporation. This is basically a series of certified documents that contain all relevant information regarding your company and when it was subsequently incorporated. For all intents and purposes, it is your charter.

4. Business Financial Documents

This again can vary from one lender to the next, but you will have to submit a series of financial documents upon applying for a loan. Generally speaking, the documents requested will include: a balance sheet, profit, and loss statement, cash flow statement, and possibly projection financial statements. The more detailed and comprehensive you can supply these financial documents, the better your chances of approval get.

5. Business Lease

If your company currently leases a building you operate, you will need to provide the lender with a copy of the lease. The lease should clearly outline all relevant terms associated with the rental of the building and space.

6. Business Resume

While all lenders may not require a resume, you should still be prepared to provide the outlines of the company principles. They want to be sure that the team running the company they are considering funding has the experience and skillset to keep moving the business forward.

First Union Lending is Here for You

We specialize in getting small businesses the cash they need when they need it. Our loan programs are fast and flexible, and we fund companies from Florida to California. With merchant cash advances, lines of credit, and SBA loans, among other products, we are certain to have a lending solution specifically for you. Call today!