The process of applying for a loan involves the collection and submission of a large amount of documentation about your business and yourself. The documents required usually depends upon the purpose of the loan, and whether your business is a startup or an already-existing company.
For startups. A bank will typically request, at a minimum, the following documentation for a startup business:
Some lenders will also want you to submit a breakeven analysis in the form of a financial statement or a graph. A breakeven analysis shows the point at which the company's expenses will match the sales or service volume. The breakeven point can be expressed in terms of dollars or units sold.
For an existing business, you can anticipate a request to produce:
Other items to include. Depending upon the specific type of loan you
are seeking, you should also address certain issues germane to that loan type.
For instance, if money is requested for working capital, your documentation
should include: the amount that will be used for accounts payable, along with an
receivable aging report to disclose the current amounts overdue 30-60 days
or older; the amounts that will be used for inventory and any increase in the
number of days that inventory on hand will be held; the amount your cash
balances will be increased; and a contingency amount that is equal to at least
10 percent but preferably 25 percent. If money is needed for machinery or
equipment, include information that addresses: whether the assets will be
immediately available or if a delay is anticipated; the price of the assets and
how installation will be performed; whether installation will interfere with
current production and the cost of any interruptions. Documentation for an
acquisition of land financing should include the real estate's cost, location
and size, intended use, and whether any of the land is for future expansion.