When your business needs capital to grow, turning to a bank for a loan is an obvious choice. But, it’s going to take more than a great personality and a nice smile to get a bank to agree to give you money.
A bank is a business, too. Their business is lending money. They make money when they lend money. Banks want to lend money. But they can only make money if they get paid back. It’s in the bank’s best interest to make sure the companies they lend to are going to be able to pay them back. And it’s in your best interest to show them that you are.
So, before you go to the bank to ask for any money, get prepared. First, make sure your books and records are in order. Many business owners get behind on their financials. You may not make bookkeeping a priority, because it doesn’t affect a customer, making a new sale, or shipping out product. But if you stay on track, you’re better prepared when opportunities arise or requests come up.
After you’re sure your books are in good shape and you have your financial statements ready to go, there are multiple documents you’ll want to pull together to have available for the lending process.
Personal Information
Most banks will ask for personal financial information in addition to your business data. This typically consists of a personal financial statement (PFS) and recent tax returns. But, sometimes, they’ll request bank statements or statements from investment accounts to verify the data you have provided on your PFS.
Business Information
Most of what the bank will be looking for is related to your financials – historical performance and future forecasts. However, they will also typically ask for legal documents, like your operating agreement and corporate registration documents. Make sure you have the following ready to go for the bank:
- Latest financial statements, including a 12-month trailing profit & loss statement
- Bank Statements
- Payroll Reports
- Tax Returns
- 3-Year Forecast
- Loan documents
All banks have their process and will have specific requests, but having everything in good order before you meet with the bank will make the financing process easier and less painful!
Use our Financing Readiness Checklist to make sure you’re prepared.
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