One of the biggest challenges of small business owners is how to expand their enterprise. After all, it requires a considerable amount of capital to have a good head start. A good option therefore is to apply for a small business loan.
Loan processing can take some time. However, you can speed it up if you can already prepare the necessary documents, such as the following:
This plan would give your lenders an idea about your business and the direction it is heading a few years from now. They want to know if there is any chance that your business would not be able to survive later on, and you can no longer pay your debt.
A typical business plan can have as many as 20 pages. You have to cover your company profile, marketing strategies, human resources management, as well as the technical and financial aspects of your enterprise. It is also needed to have at least a five- to ten-year projection of your sales, liabilities, and assets.
Declaration of Collateral
A small business loan is often secured, which means you need to have a guarantee. For your business, you can use your assets, business equity, cash in hand and in the bank, and borrowed funds. There are also banks that accept other properties such as homes and vehicles as collaterals.
This document would inform the lenders on how much money you will owe, the small business loan package (if there are many to choose from) you are selecting, and your working capital. You may also have to detail how you are planning to utilize the loan. Most lenders, especially banks, would definitely want you to use the money for your business–nothing else.
Credit Rating Report
All secured loans require this one. The report would inform your lenders your capacity to pay for the small business loan. It would contain details on the debts you obtained in the past, defaults, and bankruptcy files. If you want to have a much bigger chance of getting your loan approved, make sure that your credit score does not go below 700. You can also ask for a credit rating report from any or all of the three credit bureaus: Trans Union, Experian, and Equifax.
There are also other documents that could be asked of you, so make sure that you can contact your lender first for the list of requirements. Missing out on at least one of them may prolong the procedure or, worse, cause your application to be rejected.