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Capital sources: How to apply for a loan
 Before
you approach a lender with your request, you should ask the lender
what's required for a loan. Most use certain guidelines to determine
if a business is qualified. For a business loan, chances are that
you'll need copies of some financial documents.
If you're already in business and wish to expand,
you will need to prepare the following:
- A balance sheet. Have a current one that shows
the past 90 days, as well as one for each of the past three years.
- A cash-flow statement for the coming year. This
is the most overlooked part of the loan application, according
to loan officers, and it is considered very important to the lender.
Remember, "Can you repay?" This is where you prove you can.
- A current personal financial statement. You will
also need a statement for every partner or stockholder who owns
a 20 percent or more share in the company.
- A list of collateral offered as security on the
loan. Be sure to include present market value.
- The list of the balances on any existing liens.
- A statement of the amount of the loan sought and
the purpose for it.
If you want to startup a business you will need to:
- Describe the business. Give the name, location,
product, business goals and a description of the company's legal
structure.
- Introduce key personnel. Explain your experience
and management abilities and the background of other team members.
- Prepare an estimate of how much you need to borrow.
Explain how much you and others will invest in the business. Describe
how the loan will be used and repaid.
- Prepare an estimated balance sheet from business
day one, and a detailed profit and loss statement for the first
year of business.
- Prepare a current personal financial statement,
as well as one for every partner or stockholder who owns a 20
percent or more share in the company.
- List collateral offered as security on the loan,
along with its present market value.
Take these documents to your chosen lender and fill
out the required application form. Most loan applications must also
be accompanied by a deposit check; the amount varies depending on
the institution. Be prepared to wait a few weeks for the entire
process to be completed.
Sources: Adapted from the Service
Corps of Retired Executives' "Small Business Start Up and Management
Guide, sponsored by the U.S. Small Business Administration
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