When you decide to seek a loan for your organization, it’s important to have all the documentation you need to show that you meet the requirements. However, different lending options require different requirements. Knowing what is needed gives you a better foundation for the process.
Most businesses turn to traditional lenders first. Though different financial institutions have different requirements, there are basic requirements for all applications. These requirements are:
- Financial statements from your organization
- Your building lease
- Your business credit report
The financial statements will not only show need but will help the institution understand your financial stability and ability to pay bills on time. The credit report will show your business history, particularly with debts. The financial institution will let you know the minimum eligibility requirements for your application, including the minimum credit score needed.
Alternative lenders can be a good option for businesses who may not meet requirements set by traditional lenders. They often have more flexible eligibility standards, making it easier to get your funding. Their requirements often are:
- Bank account information
- Approximately 3-6 months of financial statements for your organization
Some alternative lenders may require a credit check, while others may not. One of the advantages of alternative lenders is that the application process often takes far less time to process than traditional lenders. This is beneficial if you need funding sooner.
An SBA loan works through the U.S. Small Business Administration, which guarantees some repayment in the event that you default on the loan. This makes it safer for financial institutions to lend money to organizations. The basic requirements for this type of funding include:
- 2-3 years of tax returns, which may include personal as well as business
- Previous year’s financial statements as well as a year-to-date financial statement
- Building lease
- Credit report with a minimum 680 score
You may have to provide additional information, as well.