Whether you’re looking for unsecured funds, to buy equipment or to refinance your business debt, we’ve compiled a handy business loan checklist for the most common types of documentation and what you need to do with them to fast-track your application and get approval quickly:
Complete application and loan forms
It sounds simple, however by filling out every required section of your application and loan documents with the most up-to-date and accurate personal and business information saves you tiresome emails and phone calls that extend the approval process. Always make sure to double check if there any additional signatories needed, like a co-borrower, guarantor or witnesses, and that they complete all required sections before you return the documents.
It’s at this stage of the process, besides getting a competitive deal on your business loan, that having a broker really pays off. As your continued support throughout the application process and life of your loan they act as your liaison with your chosen lender and an aggregate for all your documentation, taking the stress of the application process off your shoulders.
When completing your application you will need to provide 100 points of identification including one photo ID, like a drivers licence. This is a system devised by the Australian government that rates Australian or state-issued identification documents on a points scale. Documents such as birth certificates and passports carry the most value at 70 points, while credit cards and Medicare cards carry the least at 25 points. These documents will most likely need to be verified. You can find a summary of who can do this for you here.
An ABN active for 6 months
If you are an employee you will be asked to provide at least 3 months of bank statements and/or payslips. If you are self-employed you will be asked to provide your last individual and business tax return, a profit and loss statement and balance sheet. Rental income is also taken into account and for this you should provide a signed lease agreement, bank statements confirming rental credits for the last 3 months and a tax return with rental income included.
At least three months of bank statements
The lender may want to understand your financial position more fully and see your savings history. They may request statements for personal and business savings as well as statements from any existing loans or credit cards.
Your assets and liabilities
The lender will want to know about any existing personal or business assets/debts that exist. Assets include things like savings accounts, stocks, investment properties, cars, business equipment etc. Your liabilities are the financial obligations that you have. They may be credit cards, existing loans, like home loans, car loans etc., and regular bills etc. It is worth keeping in mind that lenders will take into account you credit card limit, rather than your current balance.
A profit & loss statement
For loans greater than $50,000, the lender may wish to see a profit & loss statement, or a P&L, to give them a good idea of how your business is tracking from a profit perspective. A P&L should contain all of your income, such as sales, cost of the goods sold and your gross profit, as well as your expenses such as rent, wages, insurance etc. Your total expenses are deducted from your gross profit to give your your net profit.
Although each lender will vary slightly in their documentation requirements, you can know they will be looking to gather as much detail on your and your business’ financial situation as possible. Preparing as much of your documentation as you can before you apply means you can minimise your approval time and know you are answering questions on your financial situation correctly.
If you’re looking to find a business loan, FundingPro can help you compare a range of competing lenders, their rates and deals with one application. Apply now.