It’s true, every lender is different and many of them don’t require the same documentation, but here’s a list of six important financial documents that will help you prepare for just about any small business loan—from the SBA to an online lender.
1. Your business financial statements: These are the documents the lender will look at to confirm that you can repay the loan and should include a Profit & Loss (P&L) statement. This should be current within 90 days of your application and will need to include any supplementary schedules from the last three fiscal years. You should also include a detailed projection of income and expenses along with a written plan explaining how you plan to achieve those objectives. However most online lenders make it a little easier. In addition to documenting your annual revenue, many will only ask to see the last three months of your checking account statements.
2. Your personal financial information: Most lenders are going to look at your personal financial history as well as your business financial history. This is particularly true if your business isn’t very old or is very small. You should also expect to sign a personal guarantee if you are offered a loan. The SBA, for example, might not require you to completely collateralize a loan, but they will want all the collateral you have—including your home and personal property.
3. Income tax returns: Make sure you have the last three years of signed personal and business federal tax returns at your fingertips—this will include the returns for all the principles in your business.
4. Ownership and affiliations: Be prepared to disclose any other businesses you have a financial interest in. And, if you have partners, they will need to sign any documents related to the loan you’re applying for.
5. Business Certificate/Business License: You’ll want to have your business license handy; and if you’re business is a corporation, your corporate seal. Many online lenders will only need to have proof of a business checking account.
6. A copy of your business lease: Include a copy of the lease agreement if you are renting space or leasing any equipment critical to doing business.
Although there are lenders that won’t require all of this information, this is a great place to start, as some lenders will ask for even more. Regardless of whether or not you will need all this documentation for any particular loan application, it’s a good idea to have this information ready because it will help you understand some of the key questions every lender will likely ask.
I once spoke with a lender who said, “If I know more about their business by looking at the financial documents than the borrower does, I’m probably not going to give them a loan.”
Having this information at your fingertips will not only help you understand what’s happening within your business, it might even improve your odds of success.