Small Business Loans - Pre-qualifying

Prequalifying for a Small Business Loan

Qualifying for a business loan requires providing the lender with a lot of financial information.  However, this will not be a problem if the borrower is organized.  There are certain documents that a lender will want, and having these documents ready beforehand will smooth the process.  Below is a list of the documents that most borrowers need to prepare before qualifying for a business loan.

Financial statements.  A borrower will be asked to supply financial statements for their business.  For a small business these statements are usually not audited.  Rather, they are compiled either by the business owner or by the owner's accountant.  Three years of financial statements are usually required.

Personal financial statements.  Small businesses in particular will be asked to provide personal financial statements for its owner(s), who may then be asked to guarantee any loan.  Again, these statements are not audited, and are often simply forms provided by the bank and filled out by the owner(s).

Business Plan.  Lenders will ask for a business plan to learn how the loan proceeds will be used, and how the borrower will pay the money back.  The business plan can be professionally done by an accountant if the borrower can afford it.  If not, the business owner can prepare the business plan by following the instructions in a book or kit.

Banking information.  The business will need to list its bank accounts, including all deposit accounts and loans.  The borrower should be sure that deposit accounts are not overdrawn, and that loans are paid current. 

Credit reports.  The lender will run a credit report on the business, and possibly on the owner(s) as well.  The borrower should check their own credit reports before qualifying for a business loan, and correct any mistakes found.

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