When you're applying for a loan, it’s important to know what you’ll need to provide and what lenders are looking for. Think of your loan application as a sales tool, just like your brochures or ads. When you put togetherThingsthe right combination of facts and figures, your application will sell your lender on the short- and long-term profit potential of lending money to your business. To do that, the application must convince your lender that you'll pay back the loan as promised and that your managerial ability will result in a profit-making partnership.
Banks are in the money-lending business. To lend money, they need evidence of security and stability. It’s that simple.
How can you provide this evidence when your business hasn’t even gotten off the ground? Begin by making sure your loan application is both realistic and optimistic. If you predict an increase in sales of between 8 and 12 percent, base your income projections on an increase of 10 percent, and then specify what you intend to do to ensure the additional sales.
Also make sure your application is complete. When a piece of an application is missing, bankers instantly suspect that either something is being hidden or the applicant doesn’t know their business well enough to pull the information together.
There are 12 separate items that should be included in every loan application. The importance of each one varies with the size of your business, your industry, and the amount you're requesting. Many of these items are part of your business plan; a few of them will have to be added. Here’s a look at each section:
