14 Small Business Loan Documents You’ll Need

loan documents

If you’re like most small business owners, the thought of taking out a loan to grow your business is daunting. Loan documents are key when small business owners are seeking financing. But what documents do you need for your loan application, and where do you start? Relax – we’ve got you covered.

In this article, we’ll first reveal a list of 14 essential documents for small business loans. Then, we’ll explore the importance of personal and financial information lenders require, explore the main types of loan documents necessary for approval, and discuss additional considerations, such as leveraging digital tools for streamlining the application process and the role of personal financial documents. This guide aims to arm you with the knowledge to navigate the loan application process confidently.

14 Documents Required for Loan Approval

Are you wondering what documents are needed for a small business loan? The entire agreement, or loan package, consists of a number of documents that the borrower and lender will sign. And while some lenders don’t require a personal guarantee from the owner of the business, other lenders may require it.

The loan application process can be lengthy, so it’s important to start gathering the necessary paperwork as soon as possible.

Small Business Loan Documents You'll Need

1. Updated Business Plan

An updated business plan is one of the first things a lender will request. Your business plan should include your company’s financial history and balance sheet, as well as your current and future goals. This document will give the lender a better understanding of your business and help them determine if you are a good candidate for a loan.

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2. Business Income Tax Returns

Business income tax returns are another important document that lenders will request. This paperwork provides the lender with information on your business’s income and expenses. It is important to note that lenders will usually request tax returns for the past three years.

3. Bank Statements

Bank statements that show cash flow for the past three months are also required by most lenders. This document will help the lender understand your business’s financial situation and determine if you have the ability to repay the loan.

4. Business Registration

Lenders will also require proof of your business’s legal registration. This can be in the form of a business license, articles of incorporation, or a partnership agreement.

Small Business Loan Documents You'll Need

5. Business licenses

Business licenses are required in order to operate in most states. This document will show the lender that your business is legitimate and that you are operating within the law.

6. An EIN

EIN, or Employer Identification Number, is a unique number assigned to your business by the IRS. This document is required in order to open a business bank account and will be used by the lender to verify your business’s identity.

7. Financial Statements

Financial statements include your business’s balance sheet, income statement, and cash flow statement. These financial statements will give the lender a better understanding of your business’s financial situation. If you are applying for a loan, it is important to make sure that these statements are up-to-date and accurate.

8. Loan Purpose and Use

Unlike personal loans, business loans usually have to be used for a specific purpose. Your desired loan amount could be used for buying inventory, expanding your business, or hiring new employees. Lenders will want to see how you plan on using the loan funds and how it will benefit your business.

9. Loan History

If you have taken out a business or personal loan in the past, lenders will request information on your repayment history. This document will show the lender how you have handled previous loans and whether you are a responsible borrower.

10. Collateral and Guarantees

Many lenders will require collateral for a business loan. This means that you will have to put up something of value, such as your home or car, in order to secure the loan. In some cases, a personal guarantee may also be required. This means that you, as the owner of the business, will be held personally responsible for the loan.

14 Small Business Loan Documents You'll Need

11. Credit Report

Your personal credit report is another important document that lenders will request. Your credit report will show the lender your credit history and whether you have been responsible for previous loans. A good credit report and score will increase your chances of being approved for a loan.

12. Account Information

In order to complete the loan application process, you will need to provide your business’s account information. This includes your bank account number, routing number, and account balance. The lender will use this information to deposit the loan funds into your account.

13. Budget & Future Cash Flow Estimates

A budget and cash flow forecast are important documents that will show the lender your plans for the future. This document will help the lender understand how you plan on using the loan funds and whether you will be able to make the repayments.

14. Income Statement

An income statement is a document that shows your business’s revenue and expenses over a period of time. This document will help the lender understand your business’s financial situation and determine if you have the ability to repay the loan.

What Personal and Financial information Do Lenders Require?

So what are loan documents? Loan documents are a series of forms and applications used to apply for a loan, including the promissory note, security agreement, and disclosure statement. The loan documents provide the lender with all of the information they need to make a decision on the loan.

In addition to business and financial information, the lender may also require statements of personal information, such as your credit score and your debt-to-income ratio.

Small Business Loan Documents You'll Need


The 4 Main Types of Loan Documents

There are four main types of loan documents a borrower must provide when seeking business financing, including the:

  • Loan Estimate. The loan estimate is the first part of the lender’s paperwork and outlines the terms of the loan.
  • Rate Lock Form. The rate lock is a written agreement between the borrower and lender that guarantees the loan rate for a certain period of time.
  • Borrower’s Information. The borrower’s information is a form that includes the personal information of everyone who is listed on the loan application.
  • Closing Disclosure. The closing disclosure provides final details about the loan including any terms or riders.
Loan Document TypeDescription
Loan EstimateThe initial document outlining the terms and conditions of the loan, setting the foundation for the agreement.
Rate Lock FormA written agreement that ensures the loan rate remains unchanged during a specified timeframe.
Borrower's InformationA comprehensive form capturing personal details of all individuals listed on the loan application.
Closing DisclosureThe final document presenting conclusive information about the loan, encompassing terms and potential riders.

Other Information Business Owners May Need

In addition to the standard loan documents, there are a few other pieces of information that business owners may need to provide, depending on the different lenders. They may require your information on your living situation, address proof, and evidence of business experience.

While the list of 14 essential loan documents covers the basics, lenders may sometimes request additional information to get a fuller picture of your business’s financial health and potential risks.

This might include more detailed financial projections, contracts with major clients, or evidence of intellectual property that could impact your business’s value.

Being prepared to provide these documents, or even proactively including them in your application, can demonstrate thoroughness and foresight, potentially strengthening your application.

It’s wise for business owners to have a comprehensive document repository that they can draw from as needed during the loan application process.

The Role of Personal Financial Documents in Business Loans

Lenders evaluate the financial health of both your business and personal finances when considering loan applications. For small businesses, particularly those with limited financial history, the inclusion of personal financial documents is crucial. These documents offer a comprehensive view of your financial responsibility and stability, influencing lenders’ decisions.

Key documents and their significance include:

  • Personal Financial Statements: Provide a snapshot of your personal assets, liabilities, and net worth.
  • Personal Tax Returns: Offer insights into your income history and tax compliance over the years, typically required for the past three years.
  • Personal Credit Report: Reflects your credit history, demonstrating your reliability as a borrower through your credit score and payment history.

Benefits of including these documents:

  • Enhances Application Credibility: Shows lenders a full picture of your financial health, both personal and business.
  • Speeds Up the Review Process: Having these documents ready can streamline the loan application process, reducing back-and-forth requests from lenders.
  • Improves Chances of Approval: Demonstrates your personal investment and financial stability, potentially leading to more favorable loan terms.

Understanding the role of personal financial documents in the context of business loans is essential for any business owner. Preparing and reviewing these documents before submitting your loan application not only showcases your financial diligence but also significantly increases the likelihood of loan approval.


Navigating the Post-Approval Documentation Process

Securing loan approval is a significant milestone, but it’s not the end of the documentation journey. Post-approval, you may need to sign additional documents, such as a loan agreement, which outlines the terms of your loan in detail, including repayment schedules, interest rates, and any covenants or conditions.

Understanding these documents and ensuring they align with your expectations and capabilities is crucial. It’s also beneficial to maintain ongoing documentation of your loan expenditures and their impact on your business to comply with loan terms and facilitate any required reporting to the lender.

Streamlining the Application Process with Digital Tools

Digital advancements are redefining the approach small business owners take toward the loan application process, making it not only faster but also more intuitive. With a range of tech tools at your disposal, the path to securing financing is now paved with innovation and efficiency. Here’s a closer look at how technology reshapes your financing journey.

Transformative Digital Tools:

  • Streamlined Document Preparation: Utilize financial software for quick generation of essential reports.
  • Instantaneous Document Signing: Embrace digital signatures to expedite agreement processes.
  • Direct Online Submissions: Apply to lenders via online platforms for a seamless experience.
  • Centralized Document Access: Employ cloud storage for easy retrieval and management of your loan paperwork.

Advantages of Adopting Tech Solutions:

  • Time-Saving Mechanisms: Leverage automation to cut down on manual input and paperwork.
  • Enhanced Precision: Benefit from digital accuracy in document preparation and submission.
  • Secured Data Handling: Trust in advanced encryption for your sensitive financial details.
  • Expedited Loan Decisions: Enjoy quicker responses from lenders thanks to streamlined submissions.
  • Accessibility and Convenience: Manage your loan applications from any location, at any time, without the need for physical documents.

By integrating these technological solutions into your loan application process, you’re not just simplifying the submission of documents; you’re embracing a future where securing business financing is quicker, more secure, and far less time consuming. This fresh approach eliminates traditional barriers, offering a more streamlined and accessible financing experience.

Continual Document Management and Review for Loan Compliance

After securing a loan, maintaining an organized system for managing your loan-related documents and financial records is essential for ongoing compliance and audit readiness. Regularly review your loan agreement and related documents to ensure that your business operations align with any covenants or conditions stipulated by the lender.

Keeping detailed records of how loan funds are used and the financial performance of your business can help you manage your loan effectively, prepare for future financial reviews and potentially secure additional funding in the future.

Frequently Asked Questions: Loan Documents

What are loan documents, and why are they important?

Loan documents encompass a set of forms and applications used to apply for loans, including the promissory note, security agreement, and disclosure statement. These documents provide lenders with the necessary information to assess loan applications. Personal and financial information, such as credit scores and debt-to-income ratios, may also be required.

What are the main types of loan documents for business financing?

The four main types of loan documents include:

  • Loan Estimate: Outlines loan terms and is the initial part of the lender’s paperwork.
  • Rate Lock Form: Establishes a guaranteed loan rate for a specific period.
  • Borrower’s Information: Contains personal details of individuals listed on the loan application.
  • Closing Disclosure: Provides final loan details, terms, and riders.

What documents are typically needed for a small business loan application?

  • Updated Business Plan: Including financial history and goals.
  • Business Income Tax Returns: Demonstrating income and expenses for the past three years.
  • Bank Statements: Reflecting cash flow over the past three months.
  • Business Registration: Proof of legal business registration.
  • Business Licenses: Documenting compliance with state regulations.
  • Employer Identification Number (EIN): Unique IRS-issued number for business identity verification.
  • Financial Statements: Balance sheet, income statement, and cash flow statement.
  • Loan Purpose and Use: Explanation of how the loan will benefit the business.
  • Loan History: Details of previous loan repayment history.
  • Collateral and Guarantees: Assets offered as security or personal guarantee for the loan.
  • Credit Report: Personal credit history and score.
  • Account Information: Business bank account details for loan fund deposit.
  • Budget & Future Cash Flow Estimates: Plans for loan fund utilization and repayment.
  • Income Statement: Business revenue and expenses over a specific period.

Are there additional pieces of information business owners might need to provide?

Depending on the lender, business owners may need to provide information related to their living situation, address proof, and evidence of business experience. These additional details help lenders assess the overall risk and viability of the loan application.

Why is gathering loan documentation important for the application process?

Gathering loan documentation well in advance is crucial due to the often lengthy loan application process. Having all necessary paperwork prepared ensures a smooth application and increases the likelihood of loan approval. It also demonstrates your commitment to transparency and financial responsibility, which can positively impact lenders’ perceptions of your business’s credibility.

Loan Documents: Key Points

Navigating the loan process as a small business involves both excitement and caution. The key to success lies in understanding the significance of loan documentation. These documents are not just formalities; they tell the story of your business’s past achievements and future potential.

You have learned about the critical types of loan documents, such as Loan Estimates, Rate Lock Forms, Borrower’s Information, and Closing Disclosures, which lay out the terms of your loan.

Additionally, the 14 essential documents, including your Business Plan, Financial Statements, and Credit Reports, provide a detailed picture for lenders to assess your readiness for financing. Armed with this knowledge, view these documents as tools that link your business goals to financial opportunities.

Each one demonstrates your commitment, viability, and strategic planning, positioning you to secure the necessary loan and drive your business towards long-term growth and success.

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Kevin Ocasio Kevin Ocasio is a staff writer for Small Business Trends, United States Marine Corps veteran, serial entrepreneur, and certified digital marketer, who writes for various online publications including his own Grind Boss blog.

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