What You'll Need In Order To Get A Business Loan

So, you have this brilliant idea for a new business, and you are chomping at the bit to get started.  You have your website, your business cards, a small home office, and your two week’s notice letter ready to hand over to your boss, but you have just one small problem: you don’t have the money to get your business started.  You know that you need a loan of sorts, but how can a small business owner actually get a business loan.  Well, here a few things most lending institutions are going to want before considering you for a loan:

Prior Year’s Tax Returns

If you are a new business owner, it is going to be very difficult to get a loan against your business because it has no financial history, so, if this is your situation, then you will want to get the loan against your personal profile.  The bank or other financial institution will probably ask for the last two to three years of your tax returns, so make sure that you have those handy and organized.

Check Your Credit Report

Know what your credit score is, and get a copy of your recent credit report.  Make sure that everything is accurate.  If you’ve closed or paid off accounts in the past, but it is not updated on your credit report, make sure that you contact the creditor to get that resolved.  You want to make sure that your credit history is as clean as possible and that your credit score is as high as possible before applying for a loan.

Give a Clear Idea of Why You Need the Money

Obviously, you need to have an idea of why you need x amount of money, and the lending institution is of course going to want to know why as well.  Make sure you have a clear answer.  It would also be helpful to have a business plan prepared in case they ask for you.

For Existing Business Owners

If you have owned a business, then you may be able to get a loan against your business.  In this case, the procedure is roughly the same, but if your business has its own credit history, like with a corporation, then you can borrow against that instead of your own personal credit history.  Typically banks and other lending institutions will lend you 10%-20% of your gross annual income which could certainly help to grow your business.

Brandon Jones enjoys covering small business help topics.