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Preparing Loan Documents for Commercial Lenders as a Startup

2page_img2There are many documents and financial statements that commercial lenders will require from a business when applying for a loan. And that information can be even more critical when your business is a new startup.

When you are submitting loan applications to commercial lenders it is critical that you provide as much information as possible and that you understand the purpose of each document. The packet that you are compiling is very much a letter of introduction to you and your business and it provides the information that commercial lenders will use to form an opinion about your creditworthiness. The challenge begins when you try to give an accurate image of your new business. Without years of documented credit history and industry or trade credit it is difficult to demonstrate how responsible you will be when it comes time to repay the loan.

One major document that commercial lenders will examine for a startup company is the business plan. This is a detailed document that describes the company, the goals and the plan of attack for attaining the goals. It is in essence a road map that you plan to follow to grow the company. This will also explain to the lender your experience in the industry, your history of success in the industry and your management abilities. All of these are critical factors in the success of your new business. In addition to your business plan you will need to prepare detailed projections for the company. These should include your projected income for the next two or more years, projected operating costs and projected cash flow statements.

Because your business is an unknown entity due to its age, your personal financial and business history are going to have to provide the information and reputation to prove your worthiness as a business owner and as a business person. Financial documents including tax returns and net worth for the past 3 to 5 years will be needed as well as any documents displaying your ownership in other assets which might be used as collateral on the loan. You should also expect that the lender is going to require you to personally guarantee the loan in the event that your business fail. This is the reason that your personal finances are important.

Tell Your Story

Because the business is new, you are actually the narrative that the lender will be interested in. Your past business experience and accomplishments are what is important. Your resume and work history will be the beginning of the story of how you decided to launch your own business. In addition, letters of reference from other business professionals can be a great tool for you. Having respected members of your industry and the business world express their confidence in your abilities will provide a great insight to the lenders who are evaluating you and your business.

Understand the Qualifications for the Loan

As a startup business owner, it is imperative that you understand what lenders are looking for to approve a loan application. Once you have that information, then you can determine how you can best meet those needs and requests. In some cases you will not have the established credit or business history to qualify. But you might be able to apply to a less conventional lender to get that first commercial loan.


Dennis Dahlberg
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177 NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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