When you want a business loan for your business, you need to fill up an application form and submit it with the lender. Based on your application form, the lender assesses your business and allows you a business loan. If you are careful in filling up the application form, you can increase the chances of your loan being sanctioned. Moreover, if you include some important information in the application form, the loan is processed and sanctioned at the earliest. Do you know how you can make your loan application form appealing for the lender?
Here are the top things which you should include in the form to make it attractive –
A detailed business plan:
Lenders want to know why your business needs a loan and how many loans would be required. Moreover, they also want a detailed repayment plan to see how their loan would be repaid. A detailed business plan is, therefore, required when availing a business loan. Your business plan should be informative and exhaustive and contain your business details, financial statements, marketing and management strategies and also the purpose of the loan.
A cover letter:
A cover letter introduces the loan application form. You make a cover letter as an introduction to the lender explaining your business and the requirement of the loan. The letter outlines your business activities and requests the lender to approve the loan. A good cover letter helps you in getting the loan quickly.
The credit score is an important eligibility criterion for all business loans. Lenders require yours and your business’s credit score to be more than 650 or 700 before they allow you a loan. That is why the credit reports of yourself and your business should also be attached to the loan application form.
Cash flow projections:
A good business plan is incomplete without future cash flow projections. That is why you should show the lender how the loan would be used for productive uses to create a steady cash flow for the business. Cash flow projections are, therefore, needed to show future financial predictions for the business.
Information about existing debt:
If your business has an existing debt(s), the same should be disclosed to the lender when applying for a new business loan. The repayment capacity of your business depends on your existing debts and helps lenders assess the affordability of the loan for the business. Therefore, you should inform the lender of any debt which your business currently has so that the lender can estimate the amount of loan for which you qualify.
The last important thing which should be included in the application form is the set of all relevant documents for availing the loan. The set should include documents like the following –
- Bank statements of yourself and your business
- Business license
- Business registration documents
- Articles and Memorandum of Association if you own a company
- Partnership deed in case of a partnership firm
- Any type of commercial lease in the name of the business
- Address proof of the business, etc.
If you fill in the loan application form properly and include all these above-mentioned details and documents, you would be able to avail a loan easily. So, incorporate these details and get a business loan for your business needs.