Are you someone who needs a bank loan from a new company? If answered yes, you have to be ready because the bank will ask for several things before they lend the loan to you. Do you seem to feel intimidated by this idea of answering the questions of the bank? There are people who have approached the commercial banks for a business loan to finance an amount of more than $1 million but they ended up with signing a loan against their home. What is the reason behind this?
From the lenders point of view, if the borrower doesn’t believe in his business, how can they?
Business loans are in no way similar to Lendgreen quick loans as the enquiries for both types of loans are totally different. So, what should you expect the lenders to ask you? Let’s check them out.
Banks lend money to business startups but the only exception is that SBA or Small Business Administration has several programs which guarantee the portion of startup costs so that banks lend money with the federal government so as to reduce the risk of the bank. So, your business has to offer few hard assets as backup for the business loan so that the bank knows what to seize on in case you default on the loan. Home equity can also be used for obtaining a business loan.
#2: A Solid Business Plan
Although there are several exceptions but the majority of the business loan applications need a well-proven business plan. The business plan can be short and lean but still the bank will want to see the basic summary of your product, the company, the financials and the team so that they know that the business will be able to bear the expenses.
#3: All Financial Details
When it comes to business financial details, this will include all the loans (both past and present) and the debts that have incurred, each and every investment account, bank account, credit card account and all sorts of supporting information which include tax ID details, complete contact details and addresses.
#4: Accounts Receivables
This comprises of aging, account details and payment and sales history. The bank will also check your credit to know how good you’ve been managing your business finances. In case you don’t have any accounts receivables, start counting your blessings and if you do, know how to use it.
#5: Audited & Reviewed Finanical Statements
As long as the balance sheet of your business is concerned, it has to make a list of all the assets, the capital and the liabilities which are extremely important. They will check up to the last 3 years profit and loss statements and there can only be exceptions in case you didn’t have enough history. Even though you don’t have profit and loss statements but you have worthy assets and a good credit score, the lender will approve the business loan for you.
Therefore, obtaining a business is not a matter of joke as you have to be careful about the things that the lender will take into account. Make sure everything is in place before visiting the lender.