Entrepreneurs must prepare five main documents before applying for a small business loan. These vary depending on the lender, the business, and the loan specifics; however, all of this information is important to have ready prior to approaching any bank.
1) Business plan A business plan is a document, organized by sections, that outlines the details, goals, and background information of the business. Keep it short and succinct (5-10 pages, ideally), and discuss only important details lenders care about reading. Use our business plan template to help you get started.
2) Financial projections Lenders also want to see three to five years of financial projections for the business. This includes sources and uses of funds, revenues, income statements, balance sheets, cash flows, and break-evens. Use our three financial worksheets to help gather your preliminary figures. Also create a running list of Critical Assumptions — that is, exactly where you get these numbers and estimates. From there, our SBDC office can prepare projections for you using our proprietary software.
3) Personal financial statement A personal financial statement shows your financial position at a given point in time and helps determine creditworthiness. It includes general information about yourself (such as name and address), along with a breakdown of your assets and liabilities. Use SBA’s Personal Financial Statement document. It is also helpful to know your credit score ahead of time.
4) Individual tax returns Lenders will require your past three years of personal tax returns. Use your IRS documents or contact your accountant for assistance.
5) Business tax returns If you’re an existing business, the bank will also want to see three years of tax returns for the business itself. Again, use documents from the IRS or contact your CPA.
Having these documents ready prior to visiting a lender increases your likelihood of procuring funds. Our SBDC consultants can help. Give us a call at (712) 325-3376 to schedule your free appointment.
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