Navigate the Loan Process with the Help of an Accountant

Are you preparing to launch a business or make a sizeable investment to grow your existing business? Starting or expanding your business may require capital in the form of a small business loan.

Applying for a loan can be intensive and overwhelming, so having an accountant by your side to navigate the process can be very valuable. An accountant can help you understand your financial position, prepare your business financial data, review loan documents and present your application to your lender. 

Understanding Your Financial Position

A business in a position of financial strength stands the best chance of getting approved for a loan. At the same time, it is critical to understand the impact that new or additional debt will have on your company’s finances.

An accountant can assess your ability to secure a loan, comply with the loan repayment terms and manage the tax implications of the loan based on your financial statements. If the accountant determines you are unlikely to be approved for a loan, they can identify the reasons why and advise you on ways you can strengthen the financial standing of your business to improve your ability to secure a loan. 

Small businesses can choose between business loans from banks and U.S. Small Business Administration (SBA) loans. There are several differences between these types of loans. Conventional business loans from banks tend to offer lower interest rates and better terms, which make them the preferred lending source for many businesses. SBA loans, which tend to offer higher rates and more moderate credit requirements, are a good alternative for businesses that do not qualify for a bank loan. An accountant can help you determine which loan is best for you and your business. 

Preparing Financial Data

Applying for a loan will require you to prepare and share your business’s financial statements. Lenders will want evidence that you are doing well financially and have the ability to pay back the loan. An accountant can help you gather the required information and make sure it is appropriately organized and structured for your lender’s review.

Existing Businesses

If you have an existing business, lenders will want to see how your business has performed over time.

You will need to provide:

  • Business tax returns for the past three years
  • December business financial statement for the past three years
  • An interim financial statement (most recent prior month’s statement)
  • A personal financial statement for the business owner(s) 

New Businesses

If you are applying for a loan for a startup business, the requirements are different as you won’t have past financial statements and tax returns. The burden of proof for securing a loan is based on what your business will do in the future and not on what has been done in the past. An accountant can help you prepare financial projections based on your business plan and trends in your industry. 

You will need to provide: 

  • Projected business financial statements for the next two to three years. The statements should show how your business will grow as well as projected costs and expenses. Be sure to include estimated payroll needs and taxes.
  • A personal financial statement for the business owner(s)

Reviewing Loan Documents

With your financial statements in place, you will be ready to complete the loan application. An accountant can review the application, explain what is being asked of you and answer any questions you might have. The insight of an accountant at this step can ensure you are fully informed as you complete the application process.

Creating an Effective Presentation

The final step is presenting your loan request to the lender. Guidance from an accountant will help make sure you are well-prepared for this presentation.

Your accountant will walk you through the lending process from the bank’s perspective. They will educate you on how best to present your financial information and clearly communicate your financial need and your qualification for the funds. Having an accountant alongside you to provide background information on the loan process and guide you through an educated financial presentation will put you in the best place to successfully secure a small business loan. 

Get Connected Today

An accountant can help you every step of the way in the loan process and make sure you are fully prepared and confident. Contact Gift CPAs for more information on our full scope of accounting and business services. We have years of experience working with small businesses to help with loan applications, bookkeeping, taxes and other business needs. Make an appointment to meet virtually or at one of our five locations in Harrisburg, Mechanicsburg, Myerstown, Ephrata or Lancaster! 

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