SME business loans can help companies at every stage of their development.
In the early years, loans can pay for expensive equipment and ease cashflow with working capital, while established businesses can use them to refit their premises or expand their operation to reach a wider customer base. However, accessing fresh funding begins with applying for finance, which requires preparing specific documentation for submission. Here, we look at the key documents necessary to apply for an SME business loan.
Financial statements
Lenders need to understand an SME’s financial situation before approving a loan. As a result, firms must collate copies of their financial statements. These include business bank statements that cover the last six to 12 months, and their year-end accounts summarising their liabilities and assets to provide a snapshot of their financial health. Management accounts showing profits and losses, balance sheets and cashflow are often requested alongside recent VAT returns that verify a firm’s circumstances and capacity to repay.
Business information
Lenders often request a business plan that explains how funds are to be used, as well as detailed financial forecasts. Details of the business must also be provided, including identification and proof of address. An explanation of the business’s ownership structure is also essential.
Personal information
Documentation for the person applying for the SME business loan is also a must. The applicant must provide personal financial information, a proof of address and photo identification.
Further documents
Various lenders and loan types will have different criteria for documentation. Other information requested may involve tax returns and a credit history check. Documents showing personal and business assets may be asked for, as well as details of any existing finance agreements.
Tips for a smoother SME loan application
Before applying, always ensure you understand lender requirements and gather information needed in advance. After researching, prepare all necessary documents before you apply. At AJL Finance, we require six months’ worth of bank statements and a full year end accounts to assess your eligibility. Find out if you are eligible for a SME business loan today using our innovative online checker.
