2021-2022 Small Business Resource Guide | Page 10

Income Tax Returns
Most loan programs require applicants to submit personal and business income tax returns from the past three years .
Personal Financial Statements
Many loan programs require owners with more than a 20 percent stake in their business to complete and sign a personal financial statement . A personal financial statement is a snapshot of your personal financial position at a specific point in time . It lists your assets ( what you own ), your liabilities ( what you owe ) and your net worth .
Many loan programs also require one year of personal and business bank statements to be submitted as part of a loan package .
Accounts Receivable and Accounts Payable
Most loan programs require details of a business ’ s most current financial position . Before you begin the loan application process , make sure you have accounts receivable and accounts payable ( income and expenses ).
Collateral requirements vary greatly . Some loan programs do not require collateral , or something pledged as security for repayment , such as equipment or real estate . Loans involving higher risk factors for default require substantial collateral . Strong business plans and financial statements can help you avoid putting up collateral . In any case , it is a good idea to prepare a collateral document that describes cost / value of personal or business property that will be used to
secure a loan .
Legal Documents
Depending on a loan ’ s specific requirements , your lender may require you to submit one or more legal documents . Make sure you have the following items in order , if applicable :
• Business licenses and registrations required for you to conduct business
• Articles of Incorporation
• Copies of contracts you have with any third parties
• Franchise agreements
• Commercial leases
Organizing your documents
Keeping good records is essential for running a successful business , but even more critical when applying for a loan . All information you provide will be verified by your lender and the organization guaranteeing the loan . False or misleading information will result in your loan being denied . Finally , make sure you keep personal copies of all loan packages .
There are multiple financial institutions that provide commercial loans . Select banks provide Small Business Administration ( SBA ) loans which can vary in interest rates and down payment fees . If you are not seeking a SBA Loan , many other lending institutions offer commercial loans in Arlington such as your local bank .
Source : www . SBA . gov