The documents you need for a small-business loan application

Be prepared for your business loan application 

  • Prepare personal and business background information.
  • Provide legal documents such as leases or franchise agreements.
  • Be ready to answer questions about the loan purpose.

Preparation is key for small-business owners who are considering applying for a small-business loan. Before you jump into the fray of small business loan applications, take the time to gather the documentation you need and review the requirements you must meet to qualify for a small business loan.

Documentation checklist

One small business loan lender is the U.S. Small Business Administration (SBA), which is a government agency that provides support to small-business owners. But even the SBA notes that it’s not the only game in town. In addition to traditional commercial lenders, small-business loans are also available from state and local economic development agencies and nonprofit organizations, often at low interest rates.

The SBA recommends that business owners have the following documentation before they apply for a loan:

  • Personal background. This includes information as previous addresses, names used, criminal record, educational background, etc.
  • Resumes. Some lenders require evidence of management or business experience, according to the SBA.
  • Business plan. All loan programs require a sound business plan to be submitted with the loan application, the SBA states. It should include a complete set of projected financial statements, including profit and loss, cash flow and a balance sheet.
  • Personal credit report. You should obtain a credit report from all three consumer credit rating agencies before submitting a loan application the lender to check for inaccuracies that might be negatively impacting your credit score, according to the SBA.
  • Business credit report. If you’re already in business, you should submit a credit report for your business. Be sure to review the report before beginning the application process.
  • Income tax returns. You’ll likely be required to submit both personal and business income tax returns for the past three years.
  • Financial statements. The lender may require owners with more than a 20 percent stake in the business to submit signed personal financial statements, or to provide projected financial statements as part of your business plan.
  • Bank statements. You may be required to submit one year of personal and business bank statements.
  • Collateral. Some loan programs require collateral, while others do not. Consider preparing a collateral document describing the cost and value of personal or business property that could be used to secure a loan.
  • Legal documents. You may be required to submit legal documents, including: Business licenses or registrations; articles of incorporation; copies of contracts with third parties; franchise agreements; commercial leases.

Questions for you

During the application process, your lender might have questions for you. According to the SBA, these are common questions you should have answers for before you begin the loan application process:

  • Why are you applying for the loan?
  • How will you use the loan proceeds?
  • What assets need to be purchased, and who are your suppliers?
  • What other business debt do you have, and who are your creditors?
  • Who are the members of your management team?

By taking the time to prepare before applying for a small-business loan, you increase your chances of success. Gather the documents you need, review the information you must provide, and walk into the application process with confidence.