In case you are looking to unlock the opportunity to open and develop an existing small business, you will have to apply for a small business loan. When applying for funding, you’ll need to have documentation to accompany your business loan application. The small business lending process involves some of the documents you will need to provide to the lender including strategic business plan, potential growth predictions, credit history, and a loan repayment plan in addition to any important documents requested from the lender.
1) Business Plan
Before submitting your loan application for a business loan, you’ll need to create a business plan. The business plan should cover the business project you are looking to finance. It must reveal the lender that you completely understand the marketplace and products that you are offer. Provide the lender with some insight as to what you want to do. A basic business plan will consist of an outline that gives a view of what is included in the proposal, competition analysis, financial analysis, emergency plan and forecast of potential growth.
These things offer the lender with an understanding of how good you know your small business. It is imperative that all these abovementioned regions be summarized in detail in the business proposal. Make sure to offer sufficient information. When a lender evaluates your business proposal, you want them to have a clear image of how you will use this business loan, not only to raise capital to pay them back, however to be a valuable undertaking in terms of profits.
2) Financial Documents
The financial analysis should feature the financial plan on the venture, market tends, financial projections and equity. These objects express to the lender the practicability of your small business. Lenders need to make funding to businesses that will be profitable. The more credentials you offer to lender regarding your small business and its potential profitability, the good your odds are at being approved. In case you are entering into a marketplace that has not been examined or is new, use similar industries to reveal the possible growth.
Over and above your financial analysis, be organized to give copies of your tax returns and credit record. Lenders want to know your credit record and the way you have capital given to you.
3) Loan Repayment Plan
Pinpoint your overall business loan repayment plan. You should factor in repayment time and interest rate. Your projection will offer the lender an idea about the timeframe in which the loan will be repaid. Attach any collateral with your loan request that you plan to apply as a way to guarantee the repayment. The collateral will help you to get the loan and reveal the lender that there is a way for them to recover their money if you default.
In the end, discuss your way out. A way out approach is essential to address. It indicates potential thinking. As the way out approach may be primarily based on future forecasts, it still reveals that you know the change is a part of business and you are ready to manage the situations that may take place.