How to Prepare for a Loan Application

Ready to start or expand your business? A loan can give you the financial capital you need to help establish and grow your business, but getting one can be a complex process. Read on to learn what you need to do to make the process as painless and successful as possible. 

Make sure a loan is right for your business

Before you begin to apply for a loan, make sure a loan is the right step for your business. Consider other options, like grants or a business line of credit. A line of credit offers flexibility to your business and is easily accessed, plus it usually doesn’t require collateral and you only pay interest on the amount you utilize. Grants are sums of money awarded for a specific purpose and do not have to be repaid. 

During COVID-19, many small businesses were eligible for COVID relief grants to help them survive the pandemic. Research small business grants in your area to see if any applications are still being accepted. 

Prepare your Financial Documents

Once you decide a loan is the right move for your business, it’s time to demonstrate you are financially responsible and have the documents to show it. The very first step in a loan application process is to gather the relevant documents from both your personal and business finances. 

The required documents for a loan application may vary, but a good place to start is by collecting the following documents:

  • Personal and business credit reports
  • Financial statements, including revenues, assets, expenses and balance sheets
  • Tax returns
  • Loan history
  • Business leases
  • Updated business plan
  • Licenses or certificates
  • Resumes 

Verify your Credit Score and History

Keeping an eye on your credit report is a recommended practice for everyone, but especially business owners. Through AnnualCreditReport.com, a website developed by the federal government, you can view your credit report free on an annual basis. It’s critical to ensure not only your credit score is accurate, but your full credit history is as well. This will make the application process easier, avoid hiccups and help you know if you meet the qualifications for a particular loan. 

Make a Business Plan

If you haven’t already done so, put together a plan for your business. This will include cash flow, income, expenses, goals and operating costs. A business plan is tailored to your needs and lenders will expect a thorough and professional document. Not sure where to start? Gift CPAs business and financial consulting services can help you evaluate the current position of your business, and develop short-term and long-term strategies to achieve your goals for growth. Gift CPAs will provide advice based on our experience and the experiences of clients we’ve helped over the past three decades.

Research loan options

Determine what type of loan will be best for your business, and make sure you research your lender. Being educated on loans will improve your application, and help make sure you find the best fit. In addition to private lenders, the Small Business Administration, which is a government agency, offers many types of loans of varying amounts to support American businesses. One type of loan is a short-term loan, which provides a smaller amount that is distributed quickly, while long-term loans can be larger amounts that are paid off over longer periods of time. Other options are equipment loans (to fund items such as heavy machinery), start-up loans (to take your business from an idea to a reality) and microloans (small amounts offered at low rates to targeted businesses, like those serving low-income neighborhoods). 

Determine how much you need

If you have a small business without an extensive loan or credit history, start with an application for a small amount. Lenders like to see a specific amount in your request. Determine how much you need, and how comfortably you will be able to pay it off. Don’t ask for too much or too little. 

Get professional help

If all of these steps seem overwhelming, a professional service like Gift CPAs can help. You’ll be paired with a business and loan expert, who will delve into your field, find you the best loans, establish a relationship with the right financial institution to obtain financing and work with you to grow your business.


Learn more about business and financial consulting services and make an appointment to meet virtually or at one of our five locations in Harrisburg, Mechanicsburg, Myerstown, Ephrata or Lancaster!

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