Your small business loan application checklist
Someday you may need a small business loan. Review this application checklist to make sure you’re ready. Presented by Chase for Business.
Every lender may have their own forms and requirements to apply for a small business loan, but most will require some common documents. By gathering these documents ahead of time, you can be more prepared for the application and loan process and get the money you need to start or grow your business. This small business loan application checklist will help you be ready with the documents you may need to provide. (Note that you may not need all document types, depending on the amount of your loan.)
Business loan proposal
Lenders want to know how much money you need, how you’ll use it and, most importantly, how you plan to repay it. A business loan proposal outlines this information in a clear and concise manner. Not all lenders will require a proposal, but for those that do, it’s often the first thing they look at.
While much of this information is also included in your business plan, your proposal is more targeted to the specific details of the funds you are currently seeking. You’ll need to be able to demonstrate your current (if applicable) and forecasted cash inflows and outflows and how the potential loan payments fit into your overall cash flow.
Small dollar lending
What constitutes “small dollar lending”? It depends on who you ask. Many lenders — including the government — offer lower-cost loans with their own qualifying amounts. At Chase, our Business Term loans start at $5K and our Business Lines of Credit (LOCs) start at $10K.
Income tax returns
When applying for any type of business loan, be sure to have the most recent business and personal tax returns for you and any other principals of your business available for review. Most loan programs will require these forms for the previous three years.
Financial statements
To get a complete financial picture of your business, most small business lenders require financial statements. These may include personal bank statements from you and any owners with more than a 20% stake in your business. A current profit and loss statement or earnings report, a balance sheet with a breakdown of assets and liabilities, and an income statement for your business.
Keep in mind that once you’re approved for a business loan, it’s a good idea to update these documents to reflect any additional capital and better manage your cash flow.
Credit reports
Lenders will typically pull up credit reports when reviewing your loan application. However, before you submit your application, it’s a good idea to review your personal and business credit reports yourself to ensure their accuracy and have time to clear up any issues that could affect your loan approval. Once again, lenders may also look at the credit reports of any partners.
Required credit scores may vary, depending on the type of loan you are applying for and your loan originator. It’s a good rule of thumb to pay any personal or business debts on time to maintain a good credit score.
Legal documents
You may have to submit various legal documents, depending on the amount and type of loan requested and the lending institution’s unique requirements. While you most likely won’t need all of these documents, it may save you time to have them ready:
- Business certificate, license and registration
- Partnership agreements
- Corporate or LLC documents
- Deed or lease for your building (if brick and mortar)
- Articles of incorporation
Collateral documents
Sometimes lenders require collateral to secure a loan. The more convincing your business plan and forecasted profits, the better your chance of obtaining a loan without it, but it’s good to be prepared. Keep in mind that it's the policy of some lenders to require collateral for loans over a certain amount.
Common collateral includes real estate, business equipment, inventory and other business assets. Before you apply for your loan, decide what you can put up for collateral and its value. For instance, if you own real estate, you can list the property address, the price you paid and its current assessment.
The bottom line
If you’re like most small business owners, there will come a time when you’ll need some type of funding. Regardless of when that is or what it’s for, having these documents ready before you apply will help make the process smoother, and may improve your chances of receiving the capital you want quickly.
A Chase business banker can be a valuable resource in helping you gather information and determine the amount and type of loan you may need to grow your business. In many cases, borrowers who work with Chase receive an application response in as little as two minutes, and may be able to access their funds in as soon as 48 hours. There are no fees to apply for a Chase Business line of Credit.
