Business Loan for New Business – What Is the Bank Going to Ask For?

1. Business Loan for New Business – What Is the Bank Going to Ask For? When it comes to applying for a business loan for new business, knowing what to expect when you walk into the bank manager’s office can help you prepare and improve your chances of approval. There are certain criteria that must be met, with some banks being harsher than others when it comes to their qualifying requirements. All banks will probably want to know about collateral and what you have available, especially when it comes to start-up businesses. You won’t need collateral if you apply for a SBA (Small Business Administration) loan. These are federal funded programs where the government stands as collateral. This reduces bank risk and helps secure lower interest rates. In addition to this, most banks, if not all, will require to see your business plan. Your business plan should be a summary of your company, marketing, products, financials and team. Your business plan should outline how you intend to repay the loan. Your plan shows how you expect to make money with your projected forecast. Banks use this to help them identify the risk when approving a business loan for new business. You must be ready to share all your financial details for the business with the banker. This will include past loans, credit loans and any debt you have incurred. It will include credit card accounts, banking accounts, any investments along with tax ID numbers and contact information. The bank will also need a list of your account receivables, this includes the account details and their past payment history record to show that you know their money will be paid across to business in the near future. Knowing what money you are expected to receive for products or services, the bank will also want insight into your accounts payable. That is any accounts you owe money on. This will want to do a credit reference on the business, so ensure you give all the details accurately. Another thing the bank is going to look for when applying for a business loan for new business is a complete set of financial statements, which should already be reviewed and audited. The balance sheet and your profit and loss statements should be readily available for inspection. It is worthwhile to have an accountant go over them, ensuring their accuracy before you hand them over to your bank manager to be part of your application pack. Many business owners seem surprised when the bank manager starts to ask them about their own personal financial information. Since this is a business loan for a new business, you will be responsible for the business and the bank needs to ensure that you will be able to manage the loan properly. This is done by determining how you manage your own personal finances. If you have a partner or multiple partners, you will need to provide detailed financial information on each for consideration.

2. It’s not uncommon for the bank to request you take out insurance on the loan, especially as a new business. This reduces their risk and ensures you are in the position to make the final payments with confidence, no matter what financial situation you find yourself in. Copies of your past tax returns along with future receivables will all be taken into consideration when it comes to approving your business loan for new business. About Us: CalPrivate Bank, formerly San Diego Private Bank, is a leading private bank serving clients throughout Southern California in the United States. This very well-established bank services high net worth individuals and businesses of all sizes. CalPrivate Bank’s focus is to provide a Distinctly Different Banking Experience through unparalleled service and creative funding solutions for individuals and businesses with complex financial needs. They offer a wide array of financial services, including checking, savings, time deposit accounts, treasury management and related tools. To find out more, visit https://calprivate.bank/.