What documents do I need when applying for a business loan?

Businesses of all sizes can find themselves in need of help with funding. Whether it’s funding to help cash flow or to invest into growing the business further, a business loan can make all the difference to the day-to-day running of a business and if you’re looking for a quicker process time, it’s always best to have the right documents in place before applying.

If you’re looking to apply, make sure you’ve got the following documents at hand so the application process can run smoothly for you and your business. Whilst every lender is different, these are the standard documents needed to apply for a business loan:

Your personal ID and address

If you’re the sole business owner and you’re making the loan application, you’ll only need to prepare your own personal details like name, address and registered business address as well as your personal bank statements.

Businesses with several owners or partnerships will need to give the lenders all of the owners personal details including their own financial statements. Lenders will need the wider financial picture if they’re going to fund your business so understanding your financial status and credit score will help them make informed decisions.

Bank statements and filed financial accounts

Almost every lender will want to see bank statements from your business bank account, so having them prepared in advance will make the process as quick as possible. 

However, bank statements don’t give lenders a complete view of your business performance alone so they’re most likely to ask for your accounts receivables too. These give a better picture of your company’s performance, rather than working just from bank statements. 

Supplying your accounts will also include your Company Registration Number (CRN) and the registered address of your business which lenders will also need. Financial accounts and current bank statements combined help lenders understand the bigger picture of a businesses performance, not just the incomings and outgoings.

A business plan

The majority of business loan applications need a business plan to help lenders understand your vision for growth and your business. Lenders will want to know what you’re going to do with the funds you’re applying for and by having a business plan, they’re able to see your business vision and whether their investment will have a positive return.

It doesn’t have to be pages long too, lean business plans are still accepted if your business plan is simple. Lenders will expect your business plan to include:

• A summary of the company

• The product

• Your market

• The team

• Current financials and predicted finance

Financial forecasts 

Most lenders will want to see that you’ve got a clear plan for how to use the loan, including a best- and worst-case scenario projection. You’ll need to share a view of what could happen with the money invested so lenders can have all the information at hand to make the right decision.

Financial forecasts are a predicted view of a business based on previous financial performance and lenders will use them to understand what the current situation is for your business. It helps them also see a clear return on their own investment should they accept your application.

Balance sheets 

Balance sheets are another important document to include when applying for funding as they give lenders an overview of all your business assets, capital and liabilities. Your latest balance sheet will also have a Profit and Loss statement which typically goes back 3 years but if you’re a newer business owner, the Profit and Loss history you do have will be sufficient for them.

It’s important to remember all lenders will have slightly different document criteria and depending on several factors like how much you’re looking to borrow and what financial state your business is in, you may need to supply slightly different documents.

If you’re looking to explore your business loan options or want to understand what options are available to your business, why not start your funding journey today.