loan documents

If you’re like most small business owners, the thought of taking out a loan to grow your business is daunting. Loan documents are key when small business owners are seeking financing. But what documents do you need for your loan application, and where do you start? Relax – we’ve got you covered. In this article, we’ll reveal a list of 14 essential documents for small business loans.

What Personal and Financial information Do Lenders Require?

So what are loan documents? Loan documents are a series of forms and applications used to apply for a loan, including the promissory note, security agreement, and disclosure statement. The loan documents provide the lender with all of the information they need to make a decision on the loan. In addition to business and financial information, the lender may also require statements of personal information, such as your credit score and your debt-to-income ratio.

The 4 Main Types of Loan Documents

There are four main types of loan documents a borrower must provide when seeking business financing, including the:

  • Loan Estimate. The loan estimate is the first part of the lender’s paperwork and outlines the terms of the loan.
  • Rate Lock Form. The rate lock is a written agreement between the borrower and lender that guarantees the loan rate for a certain period of time.
  • Borrower’s Information. The borrower’s information is a form that includes the personal information of everyone who is listed on the loan application.
  • Closing Disclosure. The closing disclosure provides final details about the loan including any terms or riders.


14 Documents Required for Loan Approval

Are you wondering what documents are needed for a small business loan? The entire agreement, or loan package, consists of a number of documents that the borrower and lender will sign. And while some lenders don’t require a personal guarantee from the owner of the business, other lenders may require it. The loan application process can be lengthy, so it’s important to start gathering the necessary paperwork as soon as possible.

1. Updated Business Plan

An updated business plan is one of the first things a lender will request. Your business plan should include your company’s financial history and balance sheet, as well as your current and future goals. This document will give the lender a better understanding of your business and help them determine if you are a good candidate for a loan.

2. Business Income Tax Returns

Business income tax returns are another important document that lenders will request. This paperwork provides the lender with information on your business’s income and expenses. It is important to note that lenders will usually request tax returns for the past three years.

3. Bank Statements

Bank statements that show cash flow for the past three months are also required by most lenders. This document will help the lender understand your business’s financial situation and determine if you have the ability to repay the loan.

4. Business Registration

Lenders will also require proof of your business’s legal registration. This can be in the form of a business license, articles of incorporation, or a partnership agreement.

5. Business licenses

Business licenses are required in order to operate in most states. This document will show the lender that your business is legitimate and that you are operating within the law.

6. An EIN

EIN, or Employer Identification Number, is a unique number assigned to your business by the IRS. This document is required in order to open a business bank account and will be used by the lender to verify your business’s identity.

7. Financial Statements

Financial statements include your business’s balance sheet, income statement, and cash flow statement. These financial statements will give the lender a better understanding of your business’s financial situation. If you are applying for a loan, it is important to make sure that these statements are up-to-date and accurate.

8. Loan Purpose and Use

Unlike personal loans, business loans usually have to be used for a specific purpose. Your desired loan amount could be used for buying inventory, expanding your business, or hiring new employees. Lenders will want to see how you plan on using the loan funds and how it will benefit your business.

9. Loan History

If you have taken out a business or personal loan in the past, lenders will request information on your repayment history. This document will show the lender how you have handled previous loans and whether you are a responsible borrower.

10. Collateral and Guarantees

Many lenders will require collateral for a business loan. This means that you will have to put up something of value, such as your home or car, in order to secure the loan. In some cases, a personal guarantee may also be required. This means that you, as the owner of the business, will be held personally responsible for the loan.

11. Credit Report

Your personal credit report is another important document that lenders will request. Your credit report will show the lender your credit history and whether you have been responsible for previous loans. A good credit report and score will increase your chances of being approved for a loan.

12. Account Information

In order to complete the loan application process, you will need to provide your business’s account information. This includes your bank account number, routing number, and account balance. The lender will use this information to deposit the loan funds into your account.

13. Budget & Future Cash Flow Estimates

A budget and cash flow forecast are important documents that will show the lender your plans for the future. This document will help the lender understand how you plan on using the loan funds and whether you will be able to make the repayments.

14. Income Statement

An income statement is a document that shows your business’s revenue and expenses over a period of time. This document will help the lender understand your business’s financial situation and determine if you have the ability to repay the loan.

Other Information Business Owners May Need

In addition to the standard loan documents, there are a few other pieces of information that business owners may need to provide, depending on the different lenders. They may require your information on your living situation, address proof, and evidence of business experience.


What do you need to know before signing a business loan agreement?

Business owners need to be aware of the interest rate on the loan, as well as any origination fees or other associated costs. They should also receive a loan estimate from the lender, which will outline the monthly payments and total cost of the loan.

What is proof of business for an SBA loan?

For an SBA loan, business owners need to provide proof of business activity, such as tax returns, bank statements, or financial statements. They may also need to provide a business plan or other documentation outlining their business model.

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This article, “14 Small Business Loan Documents You’ll Need” was first published on Small Business Trends

Source: Small Business Trends

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