What lenders want to see

Review each item to see what a lender, like any smart investor, will likely want to see if you apply for a business loan.

A detailed business plan
A person creating a business plan on a computer working on a chart showing company growthThis will show the lender that you’ve carefully thought through all aspects of your venture — from your products and production methods, to your customer-base and competition. Also be prepared to show financial projections that show expected revenues vs. costs.

Read more about how to write a business plan.

Your own personal investment
An extreme close up of a five dollar billA lender will have greater confidence in your commitment to succeed when they know you have your own money invested. Many lenders, including the SBA, often require this.

Other sources of repayment
An extreme close up of a stock certificateLenders typically want borrowers to have assets that, in case of an emergency, they could sell in order to repay the loan. Investments, IRAs, and 401(k)s are all considered solid secondary sources of repayment.

A strong credit history
File folders with one labeled “mortgage/rent”Every time you borrow money and keep your promise to pay it back, you’re proving to lenders that you keep your promises. By showing them that you’re trustworthy, you strengthen your ability to borrow again the next time. Your credit history often holds the key that opens the door to capital funding.

A sound record-keeping system
An open drawer showing file foldersThink about it: would you loan money to a business that didn’t keep comprehensive, up-to-date records? The bottom line is: a business can’t manage what it doesn’t measure. Good recordkeeping is at the foundation for your company’s future success.

A team of advisors or unpaid Board of Directors
A professional man giving a presentation in a conference to a team of advisors or unpaid Board of Directors.Businesses structured as corporations are legally required to have a Board of Directors. But even if your business is not incorporated, this is an excellent, no-cost way to gather a circle of expertise around you and your enterprise. There may be many individuals who would gladly volunteer occasional time to advise you.

Note: If you apply for a bank loan during your business start-up and growth phases, realize that you’re not simply asking for money — in reality, you’re asking the lender to invest in you and your business.

To learn more about the basics of borrowing money see the topic Using Credit to Your Advantage in the Hands on Banking for Adults course.

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