Are you in the market for a small business loan? Before you apply for any kind of funding — be it with the U.S. Small Business Administration (SBA), a traditional bank, credit union, online loan or even family or friends — be prepared by gathering up all your bookkeeping, financial and other records.

It will make the business loan application process less stressful,and you’ll have everything you need beforehand to get the stamp of approval from the lender. More importantly, you’ll be one step closer to securing the capital you need to meet your business goals.

Documents needed for a small business loan

Not all lenders require the same documents, so you want to ask what information they’ll need before you apply. However, you’ll generally need the following:

Personal credit report

This is not for lenders, who can obtain this information on their own, but for you. Know your credit rating from one of the three major credit-reporting companies: TransUnion, Experian and Equifax. Once you get your credit report, make sure you dispute any errors and be prepared to explain the reasons for late payments or defaults on your history.

If you’re just starting out in your business, the lender will likely determine your eligibility for funding based on your personal credit history and credit score. Lenders want to know that you’re a good risk and estimate the likelihood of you defaulting on a loan.

Since the most competitive interest rates usually go to the borrowers with good or excellent credit, you want to ensure the information on your credit report is correct. Otherwise, your application for a small business loan could be rejected, or you could get approved for funding with a steep interest rate.

Quick note: Even if you’ve been in business for some time, some lenders may review your personal and business credit history before approving for a loan.

Business credit report

Just like your personal credit history, it’s important to look this over and correct any errors before you apply for a small business loan. Furthermore, business credit reports can also demonstrate that you’re financially responsible and have a track record of paying business debts on time.

You can get a copy of your business credit report from Dun & Bradstreet if you’ve already applied for a DUNS number for your company.

Business financial documents 

Gather up your past tax returns (previous three years), one year of bank statements, a balance sheet, income statement, cash flow statement, accounts receivable and accounts payable.

Lenders use this information to assess your company’s financial health and determine if its overall performance is trending in the right direction. Even if your company has experienced a recent decline in sales or overall profitability, you should be transparent with the lender. Explain how additional funding will foster growth and reverse the negative trend. It’s equally important to share how you’ll execute the plan to achieve the projected positive outcomes.

Business legal documents

Some lenders won’t require this kind of detailed documentation, but have it handy just in case:

  • Any legal contracts with third parties
  • Licenses, registrations
  • Articles of incorporation
  • Lease agreements
  • Taxpayer ID number (proof of)
  • Equipment inventory (with serial numbers)
  • Collateral (cost/value of business — and personal — property that you plan to use to secure the loan)
  • Proof of insurance for any collateral property or items

How to apply for a small business loan

Once you’ve decided on a loan amount and shopped around to find the best lender, reach out to a loan officer to learn more about the lending process and what you’ll need to move forward.

Gather all the information you’ll need to apply for a small-business loan and complete the application. Most lenders let you apply online, but you can also call or visit a physical branch (if available).

The questions on the application will vary from lender to lender, but basically you’ll typically have to provide personal information to verify your identity, along with identifying and financial information about your business.

You may also be asked these questions about your intentions for the loan proceeds, similar to the following:

  • Why do you need a small business loan?
  • What are your plans for the money?
  • What other business debt/creditors do you have?

The lender will likely verify the entries on your loan application during the underwriting process. So, be sure to fill out the form in its entirety and confirm that everything you enter is accurate to steer clear of discrepancies and prevent your application from being denied in error.