Check out this piece as we take a closer look at what to expect
There’s nothing wrong with apply for business loan, as it’s one of the many possibilities out there for small or starting businesses that could use the extra money. In fact, in many cases, most might even see it as a necessity if they want to be able to advance through the ranks with their business. Once you’ve decided that you are going to apply for such a loan, the next step is to know what to expect from your lenders. Banks or loaners, in general, can request a multitude of things from you and your business. To be prepared for any circumstances, you need to get yourself accustomed to all the various small business loan requirements imposed by lenders. Here are some of the most popular ones you will more than likely run into:
Business past and plans
Lenders will also inquire about your business’ origins and how old it is. In other words, they want to know for how long you’ve been growing your business. More than that, they will want to know what your plans are for the future, or what do you want to do with the money they give you, to be more specific. To increase your shot at a hefty loan, it helps to provide a well-designed business plan for what you intend to do with the loan and where you want to take your business with the lender’s help.
Personal credit is an important requirement because it shows the lender what kind of person you are regarding how you spend money and mange assets on a personal level. You might be asking for a loan in the name of your business, and you might want to use those funds for business endeavors as well, but the bottom line is that the lender is signing a deal with you as a person, so you must also be credible and trustworthy.
Your bank statements
You are eager to take your business to new heights, but are you capable of paying back a loan? Hey, it’s not us that you need to convince, it’s the bank. And make no mistake, they will ask for your bank statements since it’s one of the most popular requirements for loans like these. They can use your bank statements to get a much better idea of how you spend your money but also of how you manage it. Managing money isn’t the same thing as having money so they’re not just interested in seeing that you can cover the investment, but that you are good with managing your financial resources.
If you are a super young business or a startup, you might have trouble providing two years worth of bank statements, which is what banks usually ask for. However, you can make up for the light folder of bank statements with other financial records and information.
After bank statements, balance sheets are the next most popular resource required by lenders because they offer a pretty clear, summed up picture of what your business is all about on the financial side. What this means is that they can see how much money you have but also how much you’re spending and how much you owe. All these help the lender calculate whether or not loaning money to you is a smart move.