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How to Get a Business Loan Fast | Supporting Strategies

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Need a Small Business Loan? Here's How to Get One.

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Ready to apply for a business loan but not sure what financial documents you’ll need? Here’s what you’ll need to get started, and how bookkeeping can help.

Whether you're pursuing a terrific new opportunity or bouncing back from a temporary setback, a loan for your small business can provide the cash you need to take your business to the next level. But where (and how) do you go about securing one? Let's take it from the beginning.

Define Your Goal
There are many viable reasons to seek a small business loan. "Because we need the money" isn't one of them. For your own planning purposes, as well as to win the confidence of prospective lenders, you need to spell out exactly how much you need, when you need it and why. You also need to detail how you intend to repay the loan — and how long it's likely to take.

Before you apply for a loan, you’ll also need to make sure your books are in order and up to date. Starting with accurate bookkeeping will save time as you prepare financial documentation during the loan process.

Sweat the Details
Depending on the lender and the type of loan, you may need some or all of the following documentation:

  • Your current P&L statement: P&L, of course, stands for "profit and loss" over a predetermined period, typically ranging from a month to a quarter to a full year. It takes into account all of your revenues for that period, minus your expenses and operating costs. It's a shorthand way to tell if your business is making money, losing money or breaking even. If your P&L routinely shows a loss, meaning your expenses exceed your revenues, a business loan won't solve your underlying problem — even if you could get one, which is unlikely.

  • Your balance sheet: This is an account of your business' financial obligations beyond standard monthly expenses, such as any debt you're carrying due to startup loans or investments. If you borrowed $100,000 to start your business, for example, you need to account for that financing on your balance sheet.

  • Your cash-flow statement: This is the most accurate indication of your business' overall financial health. It's the profit portion of your P&L minus the proportionate amount of your overall debt obligation for a given period of time — such as the amount you should be paying each month, plus interest, for that $100,000 startup loan.

  • Your tax returns: You should provide these in the interest of transparency. The lender can verify that the information you've provided the IRS about your finances is consistent with the information you've provided them — and that you aren't dealing with any red flags like penalties or back taxes.

  • Your business plan: As with defining your goal, reviewing your business plan can serve as a timely reset as well as an essential part of your loan preparation. Are the goals you've outlined for your loan aligned with the original goals you set in your business plan? It's fine to expand your business or to make a necessary pivot. But if you're seeking a loan to fund an initiative that's completely outside the scope of your original business plan, you need to be sure all of your stakeholders, including any investors or board members, are fully informed and onboard with the idea.

Potential Lenders
Okay, now that you know the type of financial documentation you may need to apply for a business loan, how do you find a lender?

You have to consider not only which lenders could provide a loan, but also which ones are most likely to provide the best terms for your circumstances. Possible sources include:

  • Small Business Administration: The SBA is not a lender as such — it simply guarantees a portion of the loans (up to 85%) that lending institutions provide. (The SBA proved its worth many times over during the COVID-19 pandemic.) Essentially, the SBA serves as a matchmaker that pairs small businesses seeking loans with institutions willing to provide them, and also gives lenders a safety net. That's a great place to start your search.

  • Banks: Since banks are in the business of making loans, it can seem surprisingly hard to secure one. But banks are primarily in the business of making money, so they want to be sure you'll be able to repay your loan, plus interest. Different banks use different metrics to determine their loan terms, including EBITDA (earnings before interest, taxes, depreciation and amortization). Be sure to shop around and compare rates. Also, it helps to establish personal relationships at the bank of your choice before you need a loan. "Who you know" still counts for something.

  • Nontraditional funding sources: Networking can prove invaluable when you're seeking financial assistance. Does your community have an organization dedicated to helping businesses such as yours? The Women's Business Development Center is but one example of the kinds of organizations that exist all around the country and are available to help businesses of specific types. Also, beyond seeking a traditional loan, you can explore other options including a small business line of credit, accounts receivable financing (a.k.a. "factoring," it's a way of getting cash against unpaid bills from your customers) or working capital loans (which are particularly useful for seasonal businesses that have to absorb significant upfront expenses).

Who Can Help?
By now you realize that applying for a business loan is an exacting and time-consuming process. You may very well also realize that it requires more time, energy and expertise than you have to spare.

An outsourced bookkeeping and controller services provider can help you get your books in order, prepare the financial documents you need to secure a loan and also provide ongoing financial data and analysis to help you achieve your business goals after you secure your loan.

At Supporting Strategies, our experienced, U.S.-based professionals use secure, best-of-breed technology and a proven process to provide a full suite of bookkeeping and controller services. Are you ready to learn how you can move your business forward? Contact Supporting Strategies today.

Dawn Gerber

Author:

Dawn Gerber

Dawn Gerber, Managing Director, Supporting Strategies | Bradenton, Sarasota & Port Charlotte, FL, provides bookkeeping and controller services to growing businesses.

Legal and Tax Disclaimer

This website is created by Supporting Strategies to provide general bookkeeping and accounting information only. Supporting Strategies does not provide tax, legal or accounting advice, and the information contained herein is not intended to do so. As such, the information provided should not be used as a substitute for consultation with professional tax, legal, and accounting advisors, and you should consult with a tax, legal and accounting professional before engaging in any transaction.