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How to Effectively Apply for a Small Business Loan

While small business loan requirements may be more flexible than other types of loan programs, you will be required to submit a significant amount of documentation with your application. The most important part of submitting your small business loan application is to make a good impression. While this will not guarantee your small business will qualify for a loan, having accurate, complete and easy-to-understand documentation will help you make a good impression.

The first thing you need to do to get a small business loan is to contact your desired lender and become familiar with the specific requirements for your loan. To learn more about the options we have available at Southern Bank, click here.

As part of the process, most lenders will want you to provide a business plan for them to review. Within this business plan, you will need to include, at a minimum, the following information:

  • Executive Summary, which is a broad overview of your business discussing who you are, what your experience is, what your business looks like, why you need a loan and what you will do with the loan funds.
  • Business Profile, which is a detailed history of your small business. It is important that this portion of your plan is easy-to-understand and looks professional. Don’t leave out any detail of your business, whether it is community involvement, charity work, employee accolades, or any other ancillary information about your organization.
  • Management Summary, which is a detailed resume of your management team. Don’t worry if your small business only consists of you; that just means you only need to include your resume. The key point here is to make sure the lender understands you are more than qualified to operate a small business.
  • Loan Fund Usage Summary, which will outline how the loan funds will be used. In most instances, you will use the Small Business Administration Form 4 as part of your application to detail how the loan funds will be used, as well as a schedule of how the loan will be repaid. Additionally, if you can provide documentation of where the repayment money will come from, that will enhance your application.
  • Financial Statements and Business Projections, which will provide ammunition to show why your small business is a worthy lending risk. You should include a statement that includes a list of personal assets, liabilities and monthly payments being made, in addition to recent personal tax returns. Consider verifying with your lender the specific documents, including format, they want to see here.

Seeking funding to help you build and grow your small business can be a daunting task. At Southern Bank, our commercial lenders will help you prepare and submit a complete small business loan application. Find a commercial lender near you HERE or stop by one of our branches.