Entrepreneurs can understand the hassle of acquiring money for investment and funding purposes. It is not an easy thing to do, looking for various options to increase the working capital. There are several reliable options to raise funds, like investing in shares, getting a personal loan, or looking for business grants. However, there are chances that these investment methods may not last for a long time, and you might have to apply for a business loan.
For many people, financing a business can be a pretty tiring and confusing process, especially for the first-timers. For others, however, getting a business loan would not be that difficult as they are fully aware of the process. With the help of a roadmap, applying for a business loan can become simple, even for first-timers.
In reality, anybody can manage the overall process of getting a long-term loan. Well, the process remains the same, be it a long-term or a short-term loan. Down below are the four things that you should be aware of before applying for a business loan.
- Find out the different types of business loans that are available near you.
- Try to learn more about the process of applying for one.
- Evaluate if you actually qualify for any of the loan options.
- Now it is time to apply for the specific type of loan which suits you the best.
This four-step process is a pretty simple one to grasp fully. What can be a little complicated is the part where you need documentation to apply for a business loan. Yes, particular eligibility criteria need to be followed before getting a loan of any nature. Knowing about the documents that will be needed in advance will prepare you for the worst. You will know which files are more important and the factors lenders will be looking into before approving your loan. Fast capital 360 business loan requirements are mentioned below for your perusal. Let’s find out more about the documents you will need to apply for a business loan.
First and foremost, every lender will request to see your bank statement, without which it will be difficult to get your loan approved. Consider the bank statement as one of the most important loan requirements for loans. The bank statement will tell the lender about the money which has been deposited every single month and where it has been utilized. Other questions you will have to answer will be:
- The title of your business on the bank statement. Bank’s records should display your official corporate name.
- They will also see if the figures in the financial statements are consistent with the ones in your bank statement.
Overall, the previous business activity of a minimum of six months will be analyzed through the bank statement.
Evidence of the Registration of the Business
Lenders will also ask about the formation of your business. They will ask if you are a sole trader, in a partnership, a limited liability company, or a big corporation. To prove you are a sole trader, you will have to submit the ‘Doing Business As (DBA) Registration’ document. If you are in a partnership, a business partnership agreement will be required. For LLC, the LLC operating agreement and for a corporation, Articles of Incorporation, Written Action of Incorporator, Bylaws, and Agreements between Shareholders will be needed.
All of these documents are critical for the approval of the business loan and will prove your existence in the business sector.
The requirement of Tax Returns
Being a sole trader or in a partnership, you will have to provide the personal tax returns data to the lender. This will be the gateway to the business loan where the lender will look at the business’s profits and the tax paid on it. For a corporation or an LLC, business tax returns documents will be shown.
Employer Identification Number (EIN)
Internal Revenue Service (IRS) provides businesses with a nine-digit number, which is also known as the Federal Employer Identification Number. This is an added requirement out of the few mentioned above.
Business Permits and Licenses
The lenders will ask for a business permit that must have been issued by the city or the state. This shows that your business is legally permitted to operate on the premises. Try to provide the lender with permits that are not yet expired or renew its copies before submitting it to them. Business licenses work just like any other license that is required by multiple parties interested in it.
Another important document the lender will inquire about will be the financial statements of your business. Statement of financial position, profit and loss statement, and cash flow statement will be required to submit to the lender. These documents will show how well the business is performing on an annual basis. Some lenders might also ask you about the future financial plans of the business. So keep that in mind as well.
History of Other Loans
If you have borrowed money previously, then be prepared to share its details with the lender. They need the history of the previous loans to find out your credibility at returning back the borrowed money. If your credit history is unreliable, then there are very few chances to get a business loan.
Many lenders need some sort of reliability or a backup plan before approving a loan. Usually, they will ask for a business’s assets as proof of collateral before approving the loan application. This is more of a secure way of providing loans by the lenders who need some sort of assurance.
Apart from these documents, try to do your homework in advance. Read every single requirement and eligibility criteria provided by the lender in detail. Knowing fully well what you are doing will give you a better idea about the whole borrowing process. Also, try not to provide any wrong documents and always go for the copies of the original ones. Within no time, your business loan will be approved if you are fully eligible for it!