How to Improve the Chances Your Company Receives a Loan
Getting a loan for your small business requires a lot of work and lenders will require a significant amount of due diligence before extending a loan to a small business. This article will provide some insight in step that a company can take to improve the chances that they will be able to obtain a loan.
To start you should create a package of items that will be needed by a lender as part of their due diligence processes. Certificates of formation or incorporation are useful. Audited or reviewed financial statements are also useful but barring that internally generated financial statements and a tax return for the last three years will pre helpful.
Have copies of major contracts including leases, existing loans or rent agreements, and any significant customer contracts ready. Further, supporting schedules such as accounts receivable aging reports, inventory listings and aging reports, and other significant measures that you u to measure your business are also helpful. Copies of any legal investigations or tax audits can be helpful as well and have your lawyer prepare a letter detailing any major or minor legal actions that you may be involved with.
Finally, be sure to prepare a budget and cash flow analysis as well as detailed plans for both the use of the money as well as how you will be able to generate the money to repay the loan under a proposed time frame. Build in different contingency models that outline your repayment plans which should assist you in obtaining the loan.