Here’s Every Document You’ll Need to take a Small Business Loan
Documentation and paperwork is the single largest obstacle to most small and micro enterprise owners’ bid to secure loans to advance their businesses’ growth. The sheer amount of paperwork required to successfully apply for business loans is quite huge. Financial institutions and lenders in the market have not put in place measures targeting cutting on such prerequisite paperwork.
Applying for a loan in our company, however, has been made significantly and relatively simple; involving as less paperwork as possible. Compared to banks and other traditional business lenders, our paperwork is streamlined and only essential in cases where the absolute necessary documents are required. This cuts on the time required for a business owner to apply and get the application processed.
Among the 5 major types of business loans commonly offered to small businesses in the market include:-
- Business line of credit
- Merchant cash advance
- Business loans
- SBA loans
- Term loans of between 36 and 60 months
To successfully apply for these types of loans as a business owner, you are only required to submit a limited type of documentation that facilitates the loan processing. Here are the 6 essential types of documents that are required of you.
Business bank statement
Business bank statements containing a summary of all your businesses’ transactions in a particular bank account helps us to visualize how your business has been performing in terms of income and expenditure. We require you to submit the latest business bank statements that cover durations of the 3 most recent months when applying for the merchant cash advance loan.
When applying for other types of loans including the business loans, business lines of credit, SBA loans, and term loans, you are normally required to submit a business bank statement that dates the latest 6 months of the business’s operations.
Credit card processing statement
The credit card processing statement contains a summary of your businesses’ transactions on its credit cards on a monthly basis. This document is only required whenever applying for the merchant cash advance loan. The statement should be dated the 3 most recent months of the businesses’ credit card transactions. All the other 4 loan types do not require the credit card processing statement to be submitted.
Business tax return
The business tax return form and statement is required whenever applying for an SBA loan and a term loan. The business tax return statement is also necessary whenever your business is applying for the merchant cash advance loan or business loan worth over $100,000. The 3 other loan types require business tax returns spanning the last 3 years of the business’s operations.
Personal tax return
Personal tax returns for the last 2 years are essential whenever applying for the SBA loan and the term loan.
Personal financial statement
The personal financial statement documentation containing an outline of your current financial standing is essential when applying for the SBA loan and the term loan. The financial statement should contain an outline of your total assets and liabilities, your account balances, credit card balances, information on your loans and mortgages, and other crucial disclosures.
Business financial statement
The business financial statement is required when applying for the SBA loan and the term loan. A sample business financial statement should be comprised of three important documents that outline the businesses’ financials on a comprehensive outline. The data should be at least 12 months before the commencement of the loan-application process.
The business’s balance sheet should contain an outline of the business’s assets, stockholders equity, and liabilities. A strong balance sheet that would guarantee and expedite a successful loan application process should contain information showing that the sum of liabilities and stockholders’ equity is relatively equal to the business’s value of the current and fixed assets.
The businesses’ income statement contains disclosures including profit and loss statements, an overview of revenues, expenses, earnings per share, and net income for the business. This information is necessary in helping visualize the businesses’ projected sales and operational expenses.
Cash flow statement
The businesses’ cash flow statement contains information relating to investing activities, financial activities, and operating activities. The operating activities shows cash flows generated from daily operations and sales. The investing activities show disclosures on the businesses’ buying and selling of assets while the financial activities contain cash flows on debt and equity. In general, this statement shows how much the business has been transacting.