No matter what state your business is in today, you may find yourself needing or wanting a working capital loan. Before you start your application, however, you can better your chances for qualification by following a few simple steps. Take a look at these three tips to help you get ready to apply for a working capital loan.
1. Create a Checklist
To ensure a smooth working capital loan application process, be prepared with paperwork that may be requested by the lender. Here are examples of documents you might need based on categories that may require deeper understanding.
- Business license
- Proof of ownership
- Bank statements
- Balance sheet (if seeking more than $150,000)
- Profit and loss statements (if seeking more than $150,000)
- Tax returns (if seeking more than $150,000)
- Business debt schedule (if seeking more than $150,000)
The exact needs vary by lender. Some may not require every item listed above.
2. Do Some Number Crunching & Soul-Searching
When deciding on a working capital loan, it’s important to balance numbers with your own personal risk analysis. Be sure you understand the specific details of the loan you’re applying for so you can make your best judgment call on your ability to repay it. It’s important to have confidence that you will, in fact, be able to afford the monthly loan payments. Compare both your monthly payment amount as well as the length of time you’ll carry the debt.
By doing this research for yourself, you can also provide the information to the lender to create a stronger application. Plus, you’ll be better informed to ensure the sustainability of your business throughout the entire life of the loan.
3. Follow Up Promptly
Once you’ve submitted your working capital loan application, you may have follow-up requests from your loan officer. You may need to submit additional documentation or clarify some piece of information. When this happens, it’s ideal to provide a response as quickly as possible so you can expedite the approval process.
The Bottom Line
Avoid last-minute scrambling during the working capital loan process by getting organized, thinking through your goals before you even start the application, and being responsive throughout the process. You’ll get the funds you need much more quickly so you can launch the new phase of your small business.