How to Get a Business Loan - Part 2

Requirements for a Business Loan: An institution sanctions a loan generally based upon two facts. The first fact is why the applicant needs a loan and the second is the applicant's ability to pay back the loan. The general requirements, though not exhaustive, for a business loan are:

Business Plan: This is the first and one of the key documents that is needed for a loan. Your business plan reflects your reason for the loan along with the detailed information on what you will do with the loan money. Some key elements of the business plan are executive summary that summarizes all the key points of the business plan, an overview of the industry your business will fall into, market analysis, competitive analysis and the plan for marketing, management and operations of your business. The annexure will contain all the extra but valuable information about your business. You may also attach some valid and key documents of your business that establish your credit worthiness.

Cash Flow Projection: Your cash flow projection will enable the lender to assess the degree of risks associated with your loan repayment capability. The loan amount sanctioned may vary according to your loan-repayment ability over a particular period of time. A cash flow projection is a document that projects the cash inflow and the cash outflow of your business. This helps you assess when you need to cut down expenditures in order to maintain decent cash position and the statement also helps you realize when you have excess cash so that you may reinvest it. Through a cash flow projection you get to know the magnitude of capital requirement of your business.

Statement of Personal Financial Status: This statement lists all your personal assets and liabilities that show your actual personal financial status.

Business Tax Returns: If you already have your own business, then a record of all the past business tax returns can be submitted along with your application. The lender will be able to assess your financial condition through these returns.

Credit Rating Report: A credit rating report reflects all the credits you took and your record of repaying them. These records are quite crucial as they show if you paid your credits on time or not and what was the magnitude of the loan.

Software for Filing Your Loan Application