1. Check your credit
Before you apply, check your personal credit score.
Personal credit scores range from 300-850. A score in a range of 580-669 is below average, 670-739 is good, 740-799 is very good and 800-850 is exceptional. As a business owner your personal credit score is a critical part of applying for a business loan.
If your personal credit score is low, work on improving your credit before applying for a loan. Be timely or early with your bill payments, work on paying off debt and check your monthly credit statements for any erroneous charges. Credit card usage is a large factor of your credit score. Maintaining large credit card balances may negatively impact your credit score.
To learn more about what’s needed to obtain credit, so that you’re better prepared when you’re ready to apply, take a few minutes to complete our How Businesses Obtain Credit financial education module.
2. Update your business plan
Most lenders will ask to see a current business plan before approving a loan. It’s a good idea to review and update yours so it’s ready to show a potential lender. The plan should include information about the loan, such as how the company plans to use the funds.
Be sure to have a comprehensive business plan to show a prospective lender. The plan should include details about how the company intends to use the funds, along with 2-years of projections.
To learn about the components of a business plan and how to create one that communicates your business’ financial future and health, check out our Developing a Business Plan financial education module.
3. Organize your personal and business documents
You’ll need the following documents and identifying paperwork when applying for a business loan:
• Photo ID
• 2 – years of business tax returns
• 2- years of personal tax returns
• Personal Financial Statement
• Business Debt Schedule
• YTD – Profit and loss statement
• YTD – Balance Sheet
• Aging Accounts Receivable
• Aging Accounts Payable
• Entity documents
• Business license
• Overview of collateral to be pledged
4. Research potential lenders
A business loan is an important part of the future of your business, and it’s best not to jump into the decision too quickly. Take the time to research potential lenders carefully, being sure to check each lender’s eligibility criteria, the average size of the loans they offer, their current interest rate average and more. It is important to find a lender that is willing to partner with you in your business growth. To learn about the services that financial institutions provide to support small businesses, take our Small Business Banking Services financial education module.
5. Submit your application
When you’re ready, consider applying for a business loan through TCU. We offer personalized service, a knowledgeable Business Lending Team, and tailored financial solutions.