We'll be the first to say that walking into a bank to apply for a commercial loan is intimidating. Especially when underprepared.
So, we created a commercial loan application checklist to help guide you on your financing journey.
(And yes, it is downloadable - see below.)
What You'll Need for Your Commercial Loan Application
Applying for a commercial loan can be a crucial step in securing the necessary funds to fuel your business growth, finance new ventures, or meet working capital needs. To streamline the complex loan application process, we present a comprehensive commercial loan application checklist that will help you organize your documents and ensure a smooth application process.
Here is an overview of what you'll need:
Company Website
Assuming your business has a website — whether that is a simple portfolio, social media pages, or a fully functioning e-commerce site — this is a great resource to provide to lenders during the underwriting process.
Business Plan and History of Company
Context is crucial.
A well-crafted business plan is a fundamental requirement for any commercial loan application. It demonstrates your understanding of your business, market opportunities, and growth strategies. Your business plan should include detailed information about your company, its mission, objectives, products or services, target market, competition, marketing strategies, and more.
For example:
- What is the structure of the company: Proprietorship / Partnership / Corporations / C Corp. / S Corp.?
- Do you have articles of incorporation / organization / partnership-agreement signed?
- Who is the beneficial owner of legal entity?
- What is the name of the controlling person?
- What is the percentage breakdown of ownership?
Less is not more here.
Financial Statements
Lenders assess the financial health of your business by reviewing financial statements: past, present, and future. This includes:
- Balance Sheet: Provides an overview of your company's assets, liabilities, and equity.
- Income Statement: Presents your business's revenues, expenses, and profitability over a specific period.
- Cash Flow Statement: Illustrates the cash inflows and outflows, ensuring your business can meet its financial obligations.
- Accounts Receivable / Aging: Gauges the financial health and reliability of company's customers. Includes a list of customers accounting for more than 10% of sales of accounts receivable.
- Accounts Payable / Aging: Summarizes the bills and invoices owed by a business, broken down by vendor and due date.
- Most recent 3 years' tax returns.
- Projections: Monthly for the upcoming year and annually for the next 3 years.
Collateral Documentation
Collateral may be required to secure your loan. Gather documents related to any assets, such as property deeds, vehicle titles, or inventory records, that you are willing to pledge as collateral. Ensure these documents are up to date and readily available.
*If financing is for a business acquisition, include copy of the LOI.
You'll want to provide the lender with the Letter of Intent or Purchase Agreement showing purchase price and other pertinent details relating to the sale.
Related Reading: 6 Tips for Creating a Better LOI
Whether you are investing in real estate, investing in new equipment, or covering operating expenses, Security Bank & Trust Co. makes the financing process smooth sailing. Check out our Commercial Loan Application Checklist and become one step closer to embarking on your next business venture.
