As a business owner, there are myriad reasons you might take out a loan. Perhaps you need the money to stock up inventory. Maybe you need CAPEX (capital expenditure) funds to upgrade or expand you facilities, or cover day-to-day operations. Whatever the reason, community banks like NVE have the capital, attractive rates, and customer service expertise to support local businesses and help them prosper.
Every lender has its own set of paperwork and required documentation; however, the following is a list from the U.S. Small Business Administration of standard information you’ll likely need to submit when applying for a business loan. Save yourself time and aggravation by collecting this information in advance:
- Bank Statements: Many loan programs require one year of personal and business bank statements be submitted as part of a loan package.
- Business Credit Report: Current business owners should be prepared to submit a credit report for the business.
- Business Plan: All loan programs require a sound business plan to be submitted with the loan application, which should include a complete set of projected financial statements.
- Collateral: Requirements vary, so it’s smart to prepare a collateral document that describes cost/value of personal or business property that will be used to secure a loan.
- Financial Statements: Many loan programs require owners with more than a 20 percent stake in a business to submit signed personal financial statements. You may also be required to provide projected financial statements either as part of, or separate from, your business plan.
- Tax Returns: Most loan programs require applicants to submit personal and business income tax returns for the previous three years.
- Legal Documents: Your lender may require you to submit one or more legal documents. Make sure you have the following items in order, if applicable:
- Business licenses and registrations required for you to conduct business
- Articles of Incorporation
- Copies of third-party contracts
- Franchise agreements
- Commercial leases
- Personal Background: Either as part of the loan application or as a separate document, you will probably be asked to provide some personal background information, including previous addresses, names used, criminal record, education, etc.
- Personal Credit Report: You won’t need to submit this, as your lender will obtain it as part of the application process; however, obtaining a credit report from all three major consumer credit rating agencies is a good idea to check for any inaccuracies or blemishes that can hurt your chances of getting a loan approved.
- Résumés: Some lenders require evidence of management or business experience, particularly for loans that are intended to be used to start a new business.
Your lender will also ask questions to help them understand the purpose of the loan, such as:
- Why are you applying for this loan?
- How will the loan proceeds be used?
- What assets need to be purchased, and who are your suppliers?
- What other business debt do you have, and who are your creditors?
- Who are the members of your management team?
Different types of loans are designed to meet different business needs. Two common loan products are Business Lines of Credit and Business Term Loans.
Business Lines Of Credit offer a pre-approved amount of available funds granted to a business or professional which they may draw upon at any time, up to the amount approved. Lines of credit are for short-term business use, and are usually available for terms up to one year. Learn about NVE Bank’s Lines of Credit here.
Business Term Loans are used to purchase anything except property. Examples include inventory, equipment, facility improvements/expansions, acquisitions, or working capital. Learn about NVE Bank’s Business Term Loans here.
New Jersey residents that have been in business for at least three years may benefit from another business loan option: NVE Express Credit. The requirements for this quick-response small business loan/line up to $25,000 can be found here.
Before making any decisions, we highly recommend meeting with a loan professional to help you determine what product fits your needs. You can take advantage of professional insight from NVE’s Business Loan/Line of Credit Banking Specialist by calling 201-816-2800 ext. 1233 or e-mailing firstname.lastname@example.org. You can also visit your convenient neighborhood branch.