Loan Checklist

Working with you
Face it, sooner or later your business will need money. Most businesses require some type of additional capital either at start-up or as the business grows. When preparing to ask for a loan or line of credit, review the following checklist.

- What kind of loan will you need? Short-term or long-term?
- How will the money be used? Inventory? Expansion? Start-up costs?
- Have a clear understanding of why you’re asking for the loan. Consider your appointment with your lender as a critical business activity; one for which you will want to be prepared, organized and professional.
- Is your firm creditworthy?
- Have you demonstrated an ability to manage the business.
- When and how will the money be paid back?
- What is the outlook for your business?
- What is the net earning power – the projection of income and finances?


What your Lender needs to know
General information about your accounting and financial records.
- Current balance sheet, and profit & loss statement.
- Accounts receivable: what is the turnover, customer payment schedule, how much is owed, and what is your reserve?
- Inventories: is merchandise in good shape? Raw material on hand? Work-in-process? - Is inventory being turned over in line with industry standards?
- Fixed Assets: What are the type, age, condition of equipment, depreciation policies, mortgages?
- Tax Returns for previous three years.

Collateral
Before agreeing to a loan, the lender may require some form of collateral to secure your loan. Collateral can take many forms depending on size, type and length of loan, credit history and lender preference.

Typical types of collateral:
Real estate
Accounts receivable
Savings accounts; Certificates of Deposit
Life insurance policies
Stocks and bonds
Guarantor - person who guarantees the loan
Co-signer – person who jointly agrees to the loan
Warehouse receipts
Trust receipts and floor planning
Chattel mortgages