Whether you're seeking a small business loan to start a new venture or improve your existing business, taking the time to polish your business plan and gather documents to highlight your prior successes may help make your business a more appealing candidate for a loan.
Start by creating a paper trail that contains documentation of your business accomplishments. This will provide your lender with valuable insights into your ability to successfully execute your business strategy and accomplish your goals.
While each financial institution has its own review process, the following documents could emphasize your successes as part of the loan application process:
- Loan repayment records. If you've successfully repaid a prior business or personal loan, showing the bank records may inspire confidence in your ability to repay your debts.
- Credit reports. It's also important to review your credit report to verify there are no errors before meeting with your lender. An up-to-date, accurate credit report demonstrates that you care about your credit worthiness.
- Positive cash flow documents. If you're seeking a loan for an existing business, providing records that demonstrate a history of positive cash flow can lend weight to your perceived ability to cover your business-related costs and repay your loan. For entrepreneurs starting a new business, it may be beneficial to highlight past successes by providing a record of positive earnings from a formerly-owned business or a business you operated in the same industry. Keep in mind that providing an accurate, realistic and thorough portrayal of how you will achieve positive cash flow in the future is also key.
- Details about industry expertise. It is important to include details showcasing your relevant industry expertise, as well as tangible successes accomplished while owning or operating a business in your chosen field. Prior achievements of note may include increased revenue growth, business expansion and securing new projects and/or clients. Your management team is also integral to the success of your business; so highlight their expertise and industry successes. A positive track record can boost lender confidence in your business' ability to compete in your market sector.
By carefully tracking and summarizing your achievements, you can bolster the foundation upon which your future business goals are assessed. Because your accomplishments can serve as a window into the future performance of your business, these documents will illustrate how you are managing for success and may help strengthen your candidacy for a loan.
The foregoing article is intended to provide general information about documenting the success of your small business and does not constitute financial advice from Union Bank. Please consult your financial advisor.