Published on April 11th, 2014 | by Falcon0
What You Will Need For A Small Business Loan
If you are a small business owner and operator you might run into a situation where you will need to borrow money for one reason or another. You might be considering a small business loan. These loans are not easy to obtain because they are vey risky for lenders due to the fact that many small businesses fail. If you are strongly thinking about a small business loan there will be some things you need to know about and some documents that will be required. The rest of this article will explain exactly what a lender is looking for and what you will need to supply to the lender in order to be approved for the loan that you are seeking.
When you are preparing to apply for a small business the first thing you will want to do is prepare your balance sheet and examine it. By looking closely at your balance sheet you should be able to determine all of your expenses, your assets, any liabilities you may have, and even what your depreciation rates are.
A lender will want to know all of the specific numbers for these items. It will be an important step for you to meet with an accountant or loan professional to be sure you know all of the details regarding your liabilities and your assets. You should also expect and be prepared to answer questions regarding your debts as well. When lenders are looking at your loan applications these are the main factors when looking to approve you for your bad credit personal loans.
An income statement will give you very valuable information about your business such as revenues, income and how the income comes into your business. Your income statement is a crucial part of your business plan and you should be able to understand it and explain it to the lender when and if they ask about it.
Profit and Loss and Cash Flow Statements
These statements are completely different than your income statement. A popular question often asked by lenders is regarding the cash flow into your business as well as the amount of cash on hand and you account receivables. These are all main and important factors when completing the loan application.
Once you have all of your financial statements prepared and you understand them you will want to prepare a document that explains why you need the loan and exactly how you plan to use the funds. The lender will want to see the how the money will be used towards the business and how it will be used to earn a profit.
The loan process for obtaining a small business loan is not an easy one in fact it can be a very long and tedious process. Lenders will also look for additional information such as business references and credit scores when making the decision to approve you for the loan or not. Once they have all of the information they need the decision will then be made and the funds will be dispersed to you. The most important thing is to be prepared.