When you’re looking to start or grow your business, one option is to apply for a business loan. Before you do, make sure you have everything in order, so the process goes as smoothly as possible. Here’s a checklist of what you’ll need when searching for bad credit small business loans:
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Business Loan Application Form
According to Lantern by SoFi, “Before you start to apply for unsecured startup business loans, it can help to do some prep work to strengthen your pitch. Even with bad credit, you can present an in-depth business plan that outlines your strategies for success and how you plan to use the funding.” A business loan application is used for all sorts of things, from expansion to a new location to buying equipment. When applying for a business loan, the lender will want to know what you plan to use the money for. Be prepared to answer questions like what is the purpose of the loan?
The business loan application form will ask about your business and its history, how you manage the finances and what use you’ll put this money toward. You can even apply online these days, making the business loan application process more manageable.
Checklist for a business loan application
Before applying for a business loan application, it’s important to keep all of your financial statements organized in one place. It ensures that you’re prepared when the lender requests them. Also, make sure that you have everything ready before actually filling out the forms needed for a business loan application, such as:
Borrower Information Form
This form is where you’ll include your personal information, business background, and financial details. It includes details like your name, Social Security number, and contact information.
Business Credit Report
This report will indicate any outstanding debts the borrower has to other creditors. It’s a good idea to check this out before applying for a loan if issues with unpaid loans or credit cards could influence whether or not your loan is approved.
Financial Statements
This includes your income statement, balance sheet, and cash flow statement. The lender will want to see how your business has been doing over the past year. In addition, they would demand to know how you’re projected to do in the future. They’ll also want to make sure you have enough cash flow to cover the monthly payments on the loan.
Necessary Documents
Make sure to have all necessary documentation in order. This includes business license, articles of incorporation, and partnership agreements. You should attach your business license, application loan history, and tax returns for the past three years. The business license will show where your business is located and whether or not you’re in good standing.
The application loan history shows how often you’ve applied for a loan before and if you have been turned down. This will give the lender an idea of your creditworthiness. The tax returns show whether or not your business is profitable and its historical performance over the last three years.
What is usually required for a business loan?
Credit scores, annual revenue, business plan and collateral are the four cornerstones of most business loan applications. But note that there are many other supporting documents you'll need to qualify for a business loan. They can include: your driver's license.
What do you need for a first time business loan?
You'll want to have a great personal credit score, strong business financials (or at least an impressive business plan,) as well as ample collateral to qualify for a first-time business loan from a bank. If you have a few years in business and solid annual revenue, you'll be even more likely to qualify.
Things to Check Before you Apply for a Business Loan
You should check a few things before applying for a business loan application. This includes ensuring that your credit score is in good standing and that you have no outstanding debts to other creditors. You’ll also want to ensure that your financial statements are up-to-date and accurate.
The checklist for a business loan application is vital to have in order before filling out the forms. This will ensure a smoother process and increase your chances of getting approved for the business loan application. By having all of your financial statements organized and ready, you’ll be able to provide the lender with all the information they need.
