You are considering a small business loan and unsure of what are needed? Generally, business loan application is the same amongst providers. In applying for a loan though, there are requirements asked of from the applicants. And it pays for you to prepare these well since the approval or disapproval of your loan application largely depends on these papers.
Business Plan – A business plan is your creditor’s guide to knowing you and your business more. Through the business plan, the provider gets an idea on why you are applying for a loan and how you are going to use the funds. In a way, the business plan substantiates your loan application.
Cash Flow Projections It is quite obvious why cash flows projections are asked for. Lenders need to know of your capacity to settle the loan. The cash flow projections serve as a good basis to determine one’s repayment ability.
Personal Financial Status You may be wondering why your personal financial status statements are needed when it is your business that is going to acquire the loan. This is due for the very reason that the lenders need to know of your stability as a person. This will give more credibility to your business. And it gives providers an assurance that indeed the loaned amount will be used for the very purpose it was loaned for.
Past Business Tax Returns – These documents are not usually asked for. But they may help in establishing your business’ credibility. By showing your past business tax returns, creditors get a glimpse of your business’ performance in the past.
Credit Rating Report First you get a credit rating by buying things on credit and paying back the money you owe. Make sure then that your credit rating report is favorable for you. If your credit rating needs some sprucing up, here are some tips for you.
One of the criteria in your credit score is the length of credit history. Therefore, the oldest creditor that you have is the one that you should try to keep transacting with. Try to make a small purchase on your old card every few months. Simply make a small purchase and then pay it off. This shows the credit bureaus that you are still in good standing with your original credit issuers. Most credit cards that are sitting dormant will not be reported to the credit bureau and actually have an adverse affect on you if you do not use them periodically. You could also make sure your credit limit is made known. Some credit cards do not report your spending limit to the credit bureaus. Therefore, all they see is that you have $3000 on your credit card. They automatically assume that this is your limit and think that you are maxing out your credit every month. Either ask your credit cards to report your limit to the bureaus or lower your balance below what you normally keep it at.
If you are eyeing a loan, don’t forget to check out preparations for small business loans for an approved your loan application.