Access to capital is fundamental to growing your business, whether you want to get a larger location or want to expand your operations. Business loans are useful tools to achieve these goals. If you’re considering applying for a commercial loan, it’s best to be well prepared before heading out to the bank.
Having your information well organized will allow you to submit a more robust application to the financial institution, help you assess your business, and even make you reflect on your business plan for commercial success.
These 7 steps are crucial:
- Have a good purpose
Your bank needs to know that you will use the money to add value to your business. You can apply for a loan to expand your business, cover payroll, buy new equipment, and increase your cash flow, among others. Make sure you know your business needs and the purpose for which you will be using the requested money.
- Go to the right entity
Approach institutions with good credentials and that have granted loans to businesses similar to yours, in your same industry and geographic area. Those entities already have most of the information they will need to decide on your case.
- Apply for the loan that best suits your business
Make sure your payment terms match your company’s cash flow. And be prepared to offer collateral linked to the loan’s purpose. Another good option: ask for a loan guaranteed by the Small Business Administration (SBA).
- Gather the necessary documentation
Make sure that your payroll tax, property tax, and income tax return filings are up to date. As part of the application process, you need to include:
- The income tax return of the last two (2) years
- Financial Statements for the last two (2) years. Must include an Interim Statement for the current year, a Balance Sheet Statement and Statement of Income and Expenses.
- Accounts receivable and accounts payable reports
- Projections of income and expenses for the next two (2) years of operations
- Copies of contracts from your leading clients
- Patents and any other proprietary information
- Review your business plan
It plays a crucial role and should include:
- Description of the business
- Marketing strategies
- Competitive analysis
- Development plans
- Administrative plan
- Key employees
- Financial information
After evaluating these tips, and if you are ready to apply for capital for your business, learn about the options that Popular has to offer and apply online.
This article is for informational purposes only and does not constitute an endorsement or guarantee of accuracy or applicability for any particular purpose. Neither Popular nor any of its affiliates, subsidiaries, or related companies shall be liable for any special, direct, or indirect harm stemming from the information contained in this article. Should you require further information or guidance on the subject of this article, you should always seek the advice of a competent professional of your choice.