Applying for a business loan is a process that requires some preparation. For example, when you apply for a loan, you’re asked to make a loan package, a series of financial statements that a lender will use to gauge your financial position.
The specific loan package you’ll need to apply for a business loan may change depending on the lender. The following list is meant to give you an idea of the kind of preparation and thinking that goes into the process.
Statement of Purpose
This document is also called “Executive Summary” and comprises a description of the amount you request (stating purpose, duration, repayment and available collateral) as well as specifying the amount of capital invested by the owners.
This document is extremely important because it’s usually the first part that lenders review, so make sure it’s well written!
This is another essential document for those applying for a business loan because lenders use it to get a general overview of your business. It should include:
- Description of your business
- Vision of your business
- Market Analysis
- Description of products/services
- Overview of your organization and management
Cash Flow Statement
Here we begin to delve into the financial nooks and crannies of your business. A cash flow statement shows how much money goes out and into your business. Include in your loan package a current 12-month cash flow statement as well as a six-month projection.
This document reflects the state of your business. It shows the income minus expenses to determine de amount of profit or loss over a certain period of time. For existing businesses it’s advisable to prepare income statements for the past three years, plus one for the current year. On the other hand, if your business is starting, you can prepare a 12-month projection.
Here you’ll show what are the assets, liabilities, and capital of your business. In other words, this is a financial snapshot of your organization at a given point in time. Prepare balance sheets for the last three years if you have an existing business. If you have a starting business, prepare a balance sheet that shows the state of your business as of the planned opening date.
Personal Financial Statement
This is a statement of assets and debts that shows your net worth and allows lenders gain perspective into your personal financial situation.
Our mission at Uniko Biz Solutions is helping you find the right financing options to grow your business and take advantage of revenue opportunities.
Reach out and let’s chart together your path to success. Get it touch today by telephone, email or social media to learn how we can help your business operate optimally and with greater confidence.