Applying for a Business Loan
by Hazel Berger, Managing Partner Fresh Admin
So you have a business idea, but you need funding. Before you submit your loan request to a banker, be organized. Be sure that you have everything ready to send together in one email. What do you need?
Legal documents for the company: EIN, Articles of Formation, and Operating Agreement
Driver's licenses and social security numbers for all the partners
Information about you and your partners. Are you press worthy? If so, let the bank know. Send them links to articles about you and your successes.
Information about your product; have you tested the market? what were the results? Why did you pick this idea? What's good about this investment? Why should the bank take the risk with you?
Create a detailed Excel spreadsheet with following:
Explain the math of how much you want to borrow. Be willing to put in 20% of the money needed. How will you be spending the loan money? What can the bank use as collateral?
Pricing for the product. How many can you sell in a day and how much is an average sale? What will your sales be for a day, week and year?
Did you sign a lease? What is your rent?
What does your profit and loss statement look like in the most likely situation and above and below that situation?
How will you be controlling your costs?
How much working capital will you need? Do you have the money to float the business if you run out of working capital?
Also, send the bank financials for similar successful businesses or businesses you already own. Be willing to disclose everything.
PERSONAL FINANCIAL INFO
The bank will need to see the last 2-3 years of your personal tax returns and your partners' as well. (Pick partners with strong balance sheets!)
Prepare a personal financial statement with your assets and liabilities. Sign this and date it. The bank will need this for your partners too.
Create a dropbox or google share with all this information and send to the bank when you are clear about what you need. Present yourself as a smart business man/woman with your act together.