A Good Business Loan Package - More Important Than Ever!

In today's market, a good loan package is more important than ever. With fewer lenders actually lending, a well prepared and accurate loan package will lead to quicker decisions, better terms, and less stress!

Written Nov 14, 2008, read 411 times since then.

Given the current economic situation facing our country, it is more important than ever to have a complete and well prepared loan package when approaching a lender for a loan. Below you will find the components of a typical business loan package. This does not cover everything a potential lender may ask for, but will get you off to a great start!

Executive Summary

The executive summary is the proposal that explains what type of loan you are seeking and why. The executive summary should contain enough information for the lender to understand your request, and any important details that should be known up front. The executive summary is NOT you business plan, but simply a 'snapshot' of your loan request.

Personal Financial Information

Most small businesses will be required to personally guarantee their loans, and this is especially true in today's market. In addition, good credit is usually mandatory (but not always). The following personal information should be included in your loan package.

Personal Financial Statement - Current and for Each Owner/Guarantor
Personal Tax Returns - Most Recent 3 Years for Each Owner/Guarantor

Business Financial Information

Lenders will need to have a good understanding your business, and its history. If you have a current business plan, that will usually work, if not, you should provide detailed information in your Executive Summary.

The following business financial information should be included in your loan package:

Business Tax Returns - Most Recent 3 Years for Each Entity
Profit & Loss – Most Recent 3 Years for Each Entity
Profit & Loss – Interim (YTD) for Each Entity
Balance Sheet – Most Recent 3 Years for Each Entity
Balance Sheet – Interim (YTD) for Each Entity
Business Debt Schedule – Current (shows loan balance, payments, rates, terms, etc.)
Business Projections (usually for SBA loans)

Real Estate Transaction Information

In the case of real estate secured loans, the following information is necessary:

Real Estate Purchase & Sale Agreement (purchases only)
Real Estate Operating Statement (investment properties)
Property Rent Roll (investment properties)
Property Operating Statement – Most Recent 3 Years (investment properties)
Property Operating Statement – Year To Date (investment properties)
Property Leases (investment properties)
Real Estate Appraisal (if available, but will usually be ordered by the lender)
Tax Statement with Legal Tax ID #

An accurate and complete loan package will get a quicker decision from the lender, allow you to ‘shop’ your request more quickly, and can lead to better rates and terms upon approval.

Learn more about the author, Gary Pickering.

Comment on this article

Posted by Linda Ryan, Seattle, Washington | Nov 17, 2008

Excellent article Gary! A cost segregation study added to the mix would help as well.
Posted by Kurt Riber, Mercer Island, Washington | Nov 17, 2008

Very timely article. Very informative and interesting.
Posted by Gary Pickering, Bellingham, Washington | Nov 17, 2008

Thanks Linda, that is an interesting idea, especially if the cost segregation would provide the lender with some additional positive financial information (like big tax savings, i.e. reduced expenses) to help make them more comfortable with the loan.
Posted by Gary Pickering, Bellingham, Washington | Nov 17, 2008

Oh, one item I failed to mention...converting your docs to PDF allows you to put your entire loan package on a CD or DVD for easy delivery.
Posted by Evelyn Turner, Bellingham, Washington | Nov 18, 2008

Great information, Gary. We need to be ready when the lending loosens up!
Posted by Bob Walters, Richland, Washington | Nov 18, 2008

Good information, I didn't realize so much was involved in business loaning. I'll keep it in mind if I ever decide to get a business loan for my company.
Posted by Mack Perry, Riverside, California | Nov 20, 2008

Good food for thought. I've thought about opening up my own business and you've given me some good ideas, keep it up.
Posted by Brien Tomassetti, Everett, Washington | Nov 20, 2008

Gary, this is an excellent article, and extremely helpful in todays business market. One thing I have noticed is that there is very little information on how to secure funding for those that wish to start up a business in a "Blue Ocean"... meaning a business that is fresh, new, and untried.

This is, however, a very good starting point as I just completed a Business Plan for a new venture this week, and it was comforting to see that I was on the right track :)

Since, my venture is a totally new niche, I included Projected Earnings based on a past venture I helped launch that was similar only in the case of deliverables and execution. I'll keep folks apprised of developments.

For those that are curious, pick up a copy of "Blue Ocean Strategy" by W. Chan Kim and Renee Mauborgne published by Harvard Business School Press.
Posted by Gary Pickering, Bellingham, Washington | Nov 20, 2008

Thanks Brien, this article is definately geared towards established businesses. I'll have to work on one for start ups. Although they are alot tougher in today's environment, programs such as the SBA 7A or 504 can be great for new businesses.
Posted by Susan Templeton, Bellingham, Washington | Nov 26, 2008

Thanks for this handy cheat list, Gary! In the case of projects, I'd add: Documented cash into the project. Cheers, Susan
Posted by Teresa Schmidt, Bellingham, Washington | 4 weeks ago

Gary, this is such a valuable article. We were fortunate (when we started our previous business) to have some expert advice about putting together our loan package. And we got the amount we needed. You've done a great service in spreading the word and telling business people exactly what they need to know. Makes one realize how serious lenders are when it comes to a business (or any) loan--especially now.

Sprout Creative. . . Fresh! Business Writing
Posted by Gary Pickering, Bellingham, Washington | 4 weeks ago

Thanks Teresa, perhaps next time I writing an article I'll hire you as my editor :)