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Preparing to Apply for Business Financing

Apr 05, 2019

Small business owners know their company and RCU teller talking to a memberproduct inside out, but when it comes time to applying for a business loan, many struggle to pull together the right documents.

The first step in the loan process is knowing what documentation is needed and gathering all the information in one place.

The financial statements and documents needed depend on the size of the loan and other factors, but they generally include:

  • Three years of tax returns for both the business and the principal(s). The amount of time can be less if the loan is for a start-up (or if documents describing the business-related experience of other senior management or owners are provided).
  • Articles of incorporation, or documentation describing the legal form of ownership of the organization.
  • If cash flow projection is needed for loan determination, a business plan that includes at least three years of projected profit & loss would be required.
  • An on-site company inspection and/or third-party appraisal.

In addition to documentation and financials, business owners should be prepared to explain how the loan relates to the operation of the business, how funds will be used, and the overall plan for success. If your business has had a net loss or other financial struggle, lenders want to understand what happened and why. Be prepared to discuss the circumstances behind the situation, what was learned, and how it can be avoided next time.

Borrowers are encouraged to find a CPA, financial planner, or another business owner to help them understand a balance sheet, profit and loss statement, and other financial tools. Finding a mentor you trust in your industry can help guide you toward a successful business loan application.

Some business owners don’t know what type of financing they need, or they may have a specific type of loan in mind that’s not their best solution.

After asking questions and learning more about the owner’s story and vision, a local lender can better recommend the right lending solution for the unique goals of the business.

With decision makers in house, local lenders can streamline the process, provide transparency and full disclosure, help educate business owners about their financial options, and provide personalized solutions tailored to each business. 

Learn more about the type of business loans RCU offers by visiting

  • Blog
  • Financial Tips

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Redwood Credit Union serves anyone living, working or owning a business in California’s Northern Bay Area, which includes the counties of Sonoma, Marin, Napa, Mendocino, Lake, San Francisco, Contra Costa and Solano. We look forward to serving you!

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