Every business loan requires you to submit a long list of business loan documents required to prove your business can handle the debt. These frequently include your personal financial information alongside your business’s revenue, income, and tax information. Findings from the 2022 Small Business Credit Survey show that 40 percent of firms applied for financing last year, but only 53 percent of those businesses were fully approved for funding. To increase your chances of being fully or partially approved for funding, you will need to provide accurate documents and meet lender requirements when you apply.
Documents required for a business loan
You’ll generally find that traditional banks and credit unions require the most documentation. You’ll also need to specify the loan’s purpose, how much you need to borrow, and how you’ll repay it. Here’s what you’ll typically need to apply for a business loan.
Personal and financial information
Lenders want to confirm your identity and learn more about your financial health. The common personal information a lender requires is:
- Name
- Address
- Phone number
- Date of birth
- Social Security number
It’s also helpful to have your personal bank statements from the past year and income documentation handy if the lender requests them during the application process. Small business lenders typically weigh your personal finances alongside your business finances. The lender will use your personal information to get a copy of your credit reports and scores. These factors affect your approval odds and the loan interest rate you receive.
If you’re requesting funding for a new venture, you may also be asked to provide a resume that reflects industry experience.
Business licenses and registration
Gather any business formation and licensure documents you received from the state or local government when starting your business. These documents prove that you’re a legitimate business and include the following:
- Articles of incorporation
- Franchise agreement (if applicable)
- Business licenses and permits (if applicable)
Also, prepare to enter your Employer Identification Number (EIN) on the loan application.
Legal documents
The lender may want a copy of the commercial lease agreement if your company operates outside your home. You should also have any contracts between your company and third parties handy if the lender requests them.
Business plan
It’s not uncommon for lenders to request a written business plan before making a lending decision. You can create a lean or traditional business plan, but both should communicate your strategy to grow a profitable business. Key elements to include are your:
- Executive summary
- Company description
- Market research
- Detailed descriptions of your products or services
- Marketing strategy
- Funding request
Financial documents
Lenders want to know if your company’s income is sufficient for timely monthly loan payments. They will also confirm if your company is in good financial health and can afford to take on more debt by examining these financial documents:
- Up to one year of business bank account statements
- Personal and business tax returns from the most recent three years
- Most recent and projected balance sheets
- Income statement and cash flow statement
- List of current accounts receivable
- Schedule of business debts
Bank statements can generally be retrieved from your online banking dashboard or by visiting a local branch. Ask your accountant for copies of your financial statements if you don’t have them on file. Some lenders may also ask for your business credit report if they don’t pull it themselves.
Documents needed for SBA loan
Beyond the documentation requirements already listed, here’s what you’ll need to apply for an SBA 7(a) loan:
- SBA Form 1919 (Borrower Information Form)
- SBA Form 413 (Personal Finance Statement)
- Current profit and loss statement, along with schedules from the prior three fiscal years
- One year of projected financial statements and a detailed explanation of how your business will meet these projections
- List of affiliates and subsidiaries and their names and addresses
- Written document detailing your company’s history, challenges, and why you’re requesting funding
- List of business loans you’ve applied for
- Proof of equity, if you’re purchasing an existing business
If you’re seeking another type of SBA loan, consult the SBA-approved lender you’re considering to learn more about what you’ll need to prepare the application package.
How to submit your application?
Once you’ve gathered your business loan documents required, the final step is formally applying with your chosen lender. Most allow you to apply online and upload the required documents, though some may require an in-person visit and physical copies. The lender will review your application and contact you with any questions or additional documentation requests they may have.
You’ll receive a lending decision once the lender reviews your application and supporting documents. It could take a few days or weeks to hear back from the lender. If you apply for an SBA loan, the decision timeline may be longer.
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Conclusion
Applying for a business loan requires careful preparation and the submission of various documents to demonstrate your business’s ability to handle the debt. By ensuring you provide accurate personal, financial, and business information, you can increase your chances of securing approval. Whether you’re applying for a traditional loan or an SBA loan, it’s important to understand the specific documentation required by the lender. Taking the time to gather all necessary paperwork and following the lender’s instructions will help streamline the process and improve your likelihood of receiving funding.
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