When you approach your banker for a loan, it is a good idea to
understand the factors the bank will evaluate before making
decision to give you a loan.
Lenders will generally ask you for certain information before
deciding to give you a business loan. To be able to evaluate
your loan request they will ask for the following documentation:
* Loan request. A description of how loan funds will be used to
develop your business. The description should include purpose,
amount, length and type of loan.
* Business profile. A document describing type of business,
products or services, ownership, annual sales, number of
employees, number of offices, geographical location, length of
time in business. Add resumes of each owner and key management
members.
* Business financial statements. Complete financial statements
for the past three (3) years and current interim financial
statements including balance sheets, profit & loss statements,
and a reconciliation of net worth. Financial statements should
not be older than 90 days.
* Projections. Provide a projection of future operations for at
least one year or until positive cash flow can be shown. This
document must include earnings, expenses, and criteria for these
estimates. The projections should be in profit & loss format.
* Collateral. The list can include real property and other
assets to be held as collateral. Describe of the collateral
offered to secure the loan, including equity in the business,
borrowed funds and available cash.
* Personal financial statements. Personal statements of all
owners, partners, officers and shareholders who owning 20% or
more of the business.
Be sure that you are carefully prepared and all data is
up-to-date. The strength and accuracy of your financial
statements will be the primary basis for the lending decision.
The following are most important documents in your financial
statements to be provided:
* Income statements showing your business profits or losses for
the last three years.
* Balance sheets from the last three fiscal years.
* Cash flow and projections including how much cash you expect
to generate to repay the loan.
* Accounts receivable including receivables and payables in to
30-, 60-, 90- and past 90-day old categories.
* Personal financial statements from you and your business
partners listing all personal assets, liabilities and monthly
payments
* Your and your business partners personal tax returns for the
past three years.
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