Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Mar 11, 2013

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In order to be considered for a business loan, applicants must provide several documents in addition to the application form. Each bank or lending institution varies in regards to the documents required, but on a whole, the majority requires the following documents: a business plan, financial statements, tax returns, legal documents, loan repayment plan, collateral identification, and several additional items.

Business Plan

A business plan is the most important part of a business loan application. This document enables both lenders and borrowers to imagine the future of a business. A business plan is a lengthy document and should be updated frequently since a business is never stagnant.

The plan includes information such as a summary of the company, market analysis, marketing plans, and financial projections. In addition, well-constructed plans have several financial documents that are necessary for loan underwriters, including a funding request and financial projections.

Financial Statements

Required financial statements for a business loan include bank statements, balance sheets, income statements, and cash flow projections. In addition, most lenders require a current financial position statement including accounts receivable and accounts payable. These statements show lenders the financial stability or instability of a potential borrower.

Tax Returns

Tax returns show business loan lenders a plethora of financial information and give lenders a better idea of how financially responsible a potential borrower is. Many lenders require the personal financial statements of each guarantor or owner associated with the company requesting a new business loan. Some lending companies require several years’ worth of tax returns, so borrowers should check with their individual lender’s requirements.

In addition to personal tax returns, lending companies will require business tax returns. If a borrower is establishing a company for the first time, these documents will be unavailable. Borrowers should check how many years of personal tax returns are required, similar to business tax returns.

For both business and personal tax returns, if the current year’s tax return is not finalized, borrowers can provide a prepared financial statement for the last year.

Legal Documents

Lending companies require borrowers to provide legal documentation of their business including business licenses, article of incorporation, copies of contract with third party companies, franchise agreements, and commercial leases. Providing all of these documents illustrates the legitimacy of a business, as well as the current and future business structure.

Loan Repayment Plan

A borrower’s repayment plan should include both the amount they intend to borrow and a description detailing how they intend to repay the business loan.

A clear repayment plan shows a potential lender if the borrower has seriously considered the time frame required to repay their debts as well as logical financial projections for the business and its success.

Collateral Identification

Collateral requirements depend on the amount requested, in addition to individual lender’s requirements.

Although a collateral document is not always necessary, providing one at the beginning will help to expedite the application process.

Applicants should prepare a collateral document detailing several valuable items’ market value. This documentation helps to add yet another layer of security to a business loan application.

Additional Items

In addition to the main requirements, lenders will request personal information from a borrower. This can include background information, such as previous addresses, names used, criminal record and educational background. Some lenders require an updated resume from the borrower.

The final requirement submitting a successful business loan application is a credit report. Although a lender can easily check a borrower’s credit rating, if the borrower is concerned about a suspect number or recent notification, a provided report can help improve the borrower’s chance of approval. If the business is already established, then a borrower should provide both a personal and a business credit report with the application.