As a lender analyzes your eligibility for a loan, they will look at your financial situation from a variety of angles to make sure you are able to take on a loan and are not a risky investment. If you’re looking to apply for a loan for your business, here are some documents you might need to collect beforehand.
Year-to-date financials
Before approving your loan application, a lender will most likely ask to see your year-to-date financials. This just means they will want to look at your income to see how much you have made so far this year. Seeing your year-to-date financials is important because it helps the lender see that your income can handle your current expenses plus the loan payment.
Business owners’ credit report
Another document you will probably need to provide your lender with when applying for a loan is your credit report. A credit report shows your lender what sort of borrowing you’ve done in the past and how promptly you made payments. It also shows your lender that other lenders have trusted you in the past and you were able to pay them back.
3 months of your business’ bank statements
Typically, lenders also like to see a detailed track record in order to determine your readiness to bear the responsibility of ongoing payments. In order to get a good idea of your income and spending habits, your lender will probably ask for 3 months of your business’ bank statements. While it can be a bit unnerving to show a lender your private records, understand that this is a normal part of the loan application process. Your lender simply wants to evaluate how prepared you are to take on debt.
Now that you know what documents your lender will want to see, aim to collect these documents prior to applying for a loan. Having these documents on hand can make the application process go more quickly and smoothly.