ABC'S OF BORROWING

SUPPORT FOR YOUR LOAN APPLICATION

The Banker will expect you to provide the following information before he processes your loan.

1. Collateral owned personally by the business person which can be assigned to the bank:

  • Real Estate
  • Savings Account
  • Municipal, Government, or Corporate Bonds
  • Time Certificates of Deposit
  • Marketable Securities

2. Collateral owned by the business which can be assigned to the bank:

  • Accounts Receivable
  • Inventory
  • Equipment and Machinery
  • Contracts Receivable
  • Real Estate

ADDITIONAL ITEMS TO BE INCLUDED IN A LOAN REQUEST
BUSINESS ACQUISITION OR NEW START UP

From Business to be acquired:

  1. Current financial statement including agings of accounts receivable and accounts payable.
  2. Income tax returns, last 3 years.

From Applicant:

  1. Business Plan with projections of cash flow.
  2. Articles of Incorporation/Partnership Agreement, if applicable.
  3. Lease Agreement or option for term of loan requested.
  4. Estimates of equipment to be purchased.
  5. Purchase Agreement. (*)
  6. Personal Financial Statement(s).
  7. Personal Tax Returns, last 3 years.
  8. Personal Resume(s).
  9. Source of Equity.
  10. Loan Request Summary.
  11. List of personal debt with name and address of lender, account number, terms, original amount and date, maturity date, balance, collateral, and status.
  12. History of Business.
  13. Specific Credit Application required by each lender.

(*) Not Applicable to Start Up Business.

BUSINESS EXPANSION:

  1. Current business financial statements including agings of accounts receivable and accounts payable.
  2. Business financial statements, last 3 years.
  3. Business tax returns, last 3 years.
  4. Business net worth reconcilement.
  5. History of business.
  6. Loan request summary.
  7. Management resumes.
  8. Personal financial statements from all 20% or more owners+
  9. Personal tax returns, last 3 years. (Same as above #8)
  10. Cash flow projections for at least 1 year with narrative support.
  11. Business and personal debt schedule with breakdown showing name and address of lender, account number, maturity date, balance, collateral and status.
  12. Lease and/or lease option for term of requested loan.
  13. Partnership Agreement/Articles of Incorporation, if applicable.
  14. Fictitious Name filing.
  15. Estimates on equipment to be purchased or work to be performed.

Six Bombs That May Torpedo Your Loan

  • Offer financial projections for only part of the term of the loan. Take your best shot; the government wants to see a projection covering the life of the loan.
  • Apply for a loan that's more than three times the collateral you put up.
  • Misclassify your product. You must use the correct SIC code from the Standard Industrial Classification Manual that is available in the library.
  • Try to use the SBA to bail you out of a bad conventional loan.
  • Check the box on the application that says you paid a consultant to help you fill it out. The SBA is very leary of high fee consultants filling out their applications.
  • Get your buddy in the state assembly to push your loan through the SBA. It doesn't work. The SBA procedure is highly automated.
 
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