STARTING A BUSINESS
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
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.
Lenders
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
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