If you have finally decided to run your very own small business, you must be ready to make all the necessary preparations. You must come up with a good business plan to back up your ideas for your small business. Furthermore, you must do a little research and determine the reasons behind every unsuccessful business venture and come up with ways on how you can avoid falling on the same pit. Once you are done with these steps, you are ready to search for an SBA-backed loan to help you sustain and finance your new venture. What are the things that you need to present to your lender? 

Regardless of how flexible the SBA qualifying standards are as compared to other loan types, the lenders will most likely seek for some amount of information prior to granting an SBA loan program. 

In general, with regards to the SBA, a certain business requires some documentation for the evaluation of a request for loan. Here some things to consider: 

Profile of the business 

Necessary papers that describe the type and nature of the business, size of manpower, annual sales, time duration and ownership must be presented. 

Request for loan

How the funds will be utilized must be described clearly. The exact purpose, amount and loan type should also be discussed.

Collateral 

For secured loans, the collateral must be offered and described. This should include the equity in the business, funds that had bee borrowed as well as the amount of cash available.

Financial Statement of the Business

Complete documentation of financial statements in the last three years plus the current interim statements should be well prepared. 

Personal financial profile, Statements of the owners, business partners and officers; as well as the stockholders that own at least 20% of the business. 

It is vital that what it stated in the financial statements is strong and accurate. This will be the primary determinant for the decision on a loan application. An updated and well-prepared documentation of these data should be well-presented. 

Here are some of the most vital documents that should be included in the financial statements; 

1. Accounting records for the last 3 years which include the balance sheets

2. Statement of income that shows the profits of the business or losses in the last 3 years

3. Projections of cash flow that clearly shows the income forecast which will be used to settle the loan

4. Accounts receivable as well as “payable aging” that shows a breakdown of receivables and payables in various categories such as 30, 60, 90 as well as previous 90-day old categories.

5. You and your partners’ personal financial records that reveals all personal assets, regular payables and liabilities. Include your personal tax returns in the last 3 years.

Small Business Loan Rates

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