Meeting with a business lender can be both an exciting and anxious time. One way to alleviate some of the stress is to be as prepared as possible for when you sit down to discuss a potential loan. Generally, business loans require significant documentation.
With that said, it is critical to be organized and have everything in order when it comes time to meet with a business lender. Remember, lenders will carefully look at your business and personal finances. It can take days or even months to process your information. Some of the more common documents to have on hand include:
W-2 Forms and other important tax documents (1099s) – These documents help lenders verify income and their sources.
Pay Stubs (proof of income) – Knowing where a borrower earns their money allows a lender to determine if they will be able to repay the loan.
Any other business licenses you may hold – Lenders are interested in this information because it helps to prove that any other businesses you own are operated legally.
A business plan for why you are seeking a loan – Along with submitting your loan application, your loan program may also want you to provide a well-thought-out business plan.
A professional resume – Some lenders want evidence of business management experience.
Financial statements (if you have them) – For people who have a stake in a business, some loan programs request your financial statements from that business for at least a year. These may include:
• Balance Sheet
• Cash Flow Statement
• Income Statement
• Bank Statements
Business and personal credit reports – Your credit report, both personal and business (if you have one), from the three main credit bureaus (Equifax, Experian, and TransUnion). It shows lenders how responsible you are in managing debt. The information on the credit report includes:
• How many credit accounts you have open and closed
• The length of your credit history
• The diversity of your credit
• Whether you have or had delinquent payments
• The number of times you have applied for a line of credit (credit card, car loan, personal loan, etc.)
A budget – Providing lenders with how you budget money, especially a budget for a business you run, shows you know how to manage spending and saving. It also gives them more information about the financial health of a business that you already own. If you don’t own or run a business, a detailed personal budget wouldn’t hurt as it can give a lender some more insight into your spending habits.
Proof of identification – Identification is essential so the lender can be sure that you are who you say you are.
Consider consulting your financial professional
To help you prepare for your meeting with a business lender, schedule an appointment to consult with your financial professional. They can help determine what to expect and how each decision could impact your financial situation now and in the future. You wouldn’t go to a surgeon who has never read a book on antimony or consulted someone who understands the practice. Making important financial decisions is no different. Schedule your appointment today.
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Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
Sources:
Business Loan Application Checklist | Minority Business Development Agency (mbda.gov)
Credit Reports | FDIC
What Documents Are Required For A Business Loan? | Bankrate
What Documents Do You Need to Apply for a Small Business Loan? | CO- by US Chamber of Commerce
This article was prepared by LPL Marketing Solutions
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