When you apply for a business loan, one of the first steps bankers will take is to review your credit report. Before you submit your application, find out your credit score and review your credit history to prevent surprises. Any incorrect information should be corrected before you apply for a loan. In addition to your personal credit history, you may also have a business credit history you’ll want to review.
There are dozens of documents you’ll be preparing and assembling to supplement your loan application. These range from business plans and marketing research information to financial income and cash flow statements, and more. Having these documents available – before you are even asked – can speed up the loan application process and help you make a good, professional impression on your banker.
Your loan application will definitely be evaluated based on your finances and your business plan, among other particulars. But bankers also appreciate additional data on your industry and projections for its growth. You can find this type of information in trade publications, your trade organization, and at government agencies such as the US Bureau of Economic Analysis
If your financial or personal history contains any possible negative information, don’t try to hide it. On your application, you will almost certainly be asked to provide personal information such as your previous addresses and any criminal or arrest record you may have. This information will be verified – and bankers don’t like to be surprised. That means it’s important to be honest and upfront about any possible derogatory information that may surface about your personal life and financial history.
When bankers risk their money on you they want to see that you have some of your own assets at risk, too. You’ll need to show that you have personal or company assets to invest in your business. You might also be asked to sign a personal loan guarantee or post collateral to secure your loan. Doing so without hesitation shows your banker that you’re confident about your business plans.
Of course you want to put your best foot forward when applying for a business loan, but bankers know that no business is without risk. Address these risks head on so bankers know that you understand potential risks and threats to your business success. If you don’t, your banker may think that you haven’t carefully considered these issues or don’t have any contingency plans for addressing them. Bankers will be realistic about what they can recover from your business if you fail, so you should be realistic, too.
You’ve got a great idea for a business that you want to bring to life. Now you just need to figure out how to get funding. This is an important step in starting a successful new business. So, to help, we’ve put together information on six types of startup loans for new businesses. Read about different business loans and some funding options you can choose from to help you start your business.
Every SBA loan has insurance requirements. But these requirements may vary depending on the type of business and loan amount your small business needs. Discover what types of insurance your small business may need to get an SBA loan.