Business

Small business loan application

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Small business loan application

Get your personal credit report and check its accuracy

You can even get credit reports from all major credit reporting companies in the country. Most financial institutions will check your credit report when accepting loan applications.

Collect the necessary financial statements

When determining whether you are eligible for a small business loan, the lender needs to reasonably determine your solvency. For this you need to pay for some important financial documents related expenses.
Improve the financial statements for the past 3 years. These statements include but are not limited to: balance sheet, income statement and net assets adjustment statement.
The latest financial statements are within 90 days from now.
Debt plan, and detailed records of accounts payable and accounts receivable (classified by month, at least going back to the first three months).
If you are a loan for a newly established business, you need to provide a balance sheet and income statement.

Develop future business plans

The time covered by your business plan should be no less than one year or until there is a positive cash flow, whichever is shorter. [2] Enter “12-month profit and loss plan” in the search engine to find the standard types of forms you need to use.
When making profit and loss plans, try to follow industry standards. If you don’t follow industry standards or don’t know what these standards are, try to articulate the assumptions used in the plan. In this way, the lender can better understand the method you use when reading your application.

Ask the financial institution which specific documents you need to prepare.

Also ask what other information is needed for your loan application. Different institutions have different requirements for small business loans. Below is a brief introduction to some common basic documents that need to be submitted.

If you are not ready, write an executive summary first

Implementation is roughly equivalent to a cover letter of explanation. It should include business background information, a brief description of the business, the required loan amount, the scope of loan use, and how the loan will be repaid.

Provide personal data of each shareholder and executive

Can you and your manager in charge accurately convert loans into profits? Your business must be able to support long enough to repay loans, and this ability to continue operations is what the bank wants to know. Dong Gao’s information can help them understand this information.

Write company profile

The company profile will give potential borrowers a deeper understanding of your company’s business and operating mode. Although a company profile can cover a wide range of businesses, you should write the information that will most appeal to potential borrowers. This information includes:
Basic company information-the type of industry, the company’s geographic location, and the products and services provided.
The company’s financial status-annual sales, projected growth rates, and current or future competition.
Company personnel composition-total number of employees, number and size of customers, and supplier information.

Prepare a loan plan, which includes the specific purpose of the loan and the determined amount to be borrowed.

Third, since each institution has its own specific requirements, its additional requirements may include the marketing methods, market positioning, and legal structure of the loan company.

Fill out the Small Business Association (SBA) Form 4

This is the most important table in small business loans. In this form, you will describe what type of loan you will apply for, how you plan to use the loan in the future, and some other information.

Describe how you talk about repayment

If the loan is your most important step, seeing the loan repayment is the most important step for potential borrowers. The following documents allow potential lenders to make sure that you put loan repayment and borrowing in equal priority.
Loan repayment statement. Briefly describe how you plan to repay the loan, especially the source and period of repayment. The other financial documents you give to potential lenders should be able to match the repayment schedule.
SBA’s 4a form. Unlike the loan repayment statement, this form records the items you intend to use as collateral (almost all loans require collateral). The repayment list in this form should include two forms, such as existing income, secured loans, or commodities.

Fill out SBA Form 413

This form is required to fill in the financial data of the following persons: owners, partners and more than 20% equity holders.
Bring all required documents and information and have a meeting with the small business loan consultant of the financial institution in charge of your company. At the meeting, confirm that the documents are all available. Although this is only a non-compulsory step, it is a good method for someone who has never applied for this type of loan.

Submit all applications and documents correctly to the relevant person or address.

Waiting for news from financial institutions. You need to know what potential borrowers will look for in your application. The following five key areas will determine whether you can obtain a small business loan.
Have sufficient equity investment in the business. Owners with equity tend to be more inclined to repay loans.
Sufficient cash flow to support the company’s operations. Cash inflows should be greater than cash outflows so that loans can be paid on time.
Adequate working capital. Working capital is the difference between current assets and current liabilities. Obviously, higher working capital is easier to obtain loans for small businesses.
mortgage. If the loan cannot be repaid, what will you use to repay the debt?
Effective resource management. Resource management includes the daily management of goods and services, as well as the timeliness of repayment and the frequency of borrowing.

If a loan is not obtained, consider a loan guarantee program

If the bank rejects your application and you are in the United States, ask if you can get a loan under the Small Business Administration’s loan guarantee program. In this plan, SBA provides guarantees for parts that financial institutions cannot afford. If the financial institution can do this, send it your loan application to the SBA, which will review your application materials. If you are eligible, SBA will contact the bank. You will get a loan through a local financial institution.
If the lender rejects your application and you are not in the United States, ask the financial institution what other options are available.

If you cannot obtain a bank loan or a small business loan under the loan guarantee program

Find a non-bank borrower selected by the SBA. Many banks are reluctant to lend to small businesses all over the street. What they need is more than financial incentives. If you want to increase your chances of getting a small business loan, work in other directions. Such as contacting non-bank loans. Non-bank loans are similar to banks, except that they usually serve businesses rather than individuals and do not have savings accounts. [10] These borrowers charge higher fees based on higher risks.

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