Filling Out an Application for Business Loans

The key to successfully securing a loan for your business is being prepared and organized, especially when filling out your loan application. You should know exactly how much money you want to borrow, how long it will take for you to pay it back, and why you need it. Convincing your creditor that your are worth the risk is not an easy task, but it is one that can be accomplished if you know how to fill out the application.

Getting your loan approved can be a lengthy process, but you can significantly shorten it and increase your chances of getting a good loan if you present yourself and your business well, and know exactly what your financial needs are. Lenders are all about giving loans and actively search for loans they can approve, but they only approve loans that they know will be repaid.

Your best chance for getting a loan comes from writing a great loan proposal or application. A well written proposal should include:

• Your business name and the names of the principals in the company, the social security number for each principal, and the business address.
• Exactly what the purpose of the loan is, how it will be used, and why it is needed.
• The exact amount you need to achieve the purpose of the loan.
• A description of your business, its history and nature, how long you've been in business, the current number of employees and any assets the business may own.
• How your business is structured or the ownership structure.
• A short background on each of the principals of the company including education, experience, skills, and accomplishments.
• Include marketing information: Define your product and market clearly, state who your competition is and explain how you compete against them, give a clear profile of your customers and how your business meets their needs.
• Be sure to include financial information: Provide balance sheets and income statements for the prior three years or if you are just starting, provide projected income statements and balance sheets, provide personal financial statements and statements from each of the principals of the company, and include the collateral you are willing to pledge to secure the loan.

All lenders are primarily concerned about repayment of your loan, so they are going to look at your business's credit, and the credit of each of the principals. Be sure you know what your business's credit is before trying to secure a loan. If there are problems, work with the credit scoring bureaus to resolve them. Work with the credit agencies to present an accurate picture of your business as well as looking your best.

Using the information you provide on your loan proposal or application and your credit report, the lender will consider several key questions. Those are:

• Have you invested money into your business? If your total investment of savings and personal equity is less than 25% of what you are asking on your loan, you will not be considered. A lending office or investor will not finance 100% of your business no matter how much you would like them to.
• Do you have a sound credit history?
• Do you have sufficient experience and training to operate and manage a business?
• Have you prepared a loan proposal or application and created a business plan indicating your understanding a commitment to the success of the business, and thus the success of paying back the loan?
• Does your business have sufficient monthly cash flow to make the loan payments?

If your loan office can answer all of these questions to their satisfaction, your application for a loan is more likely to be approved and given a good interest rate.

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Categories: Business Loans,

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