| The process of applying for a business
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| | for the business.
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| loan is a stringent one as compared to
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| | In any loan application, historical
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| the standard procedures in obtaining a
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| | records are essential to be used in
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| home mortgage loan or a personal loan.
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| | evaluating the performance of a company.
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| This is probably due to the fact that
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| | As new companies do not yet have these
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| business loans contain a greater risk
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| | records, the financial records of the
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| element as compared to other loans.
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| | owners will be used as the basis of
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| Therefore, lenders need to exercise
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| | evaluation. Income tax returns forms are
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| greater caution and emphasis when
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| | also required by lenders. All of these
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| evaluating business loan applications in
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| | records provided should be the latest
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| order to minimize their risk exposure.
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| | copies less than 90 days old, with the
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| With that, lenders evaluate their
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| | exception of the income tax returns form.
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| applicants based on the information that
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| | If the loan is applied for an existing
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| are provided as well as their judgment of
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| | company in active operations, company
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| the viability and profitability of the
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| | financial statements, including profit
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| business being financed. Thus, business
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| | and loss accounts, balance sheets and the
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| loan applicants will be required to
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| | net worth reconciliation record should be
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| submit a loan proposal along with their
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| | included in the loan proposal. Again, all
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| applications with the purpose of creating
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| | of this information should also be the
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| a positive impression upon the lender.
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| | latest and less than 90 days old.
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| The first element of a loan proposal is
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| | Additionally, a listing of accounts
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| an executive summary, providing short
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| | receivables and other short term and long
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| descriptions of the type of business and
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| | term debt should be attached.
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| the industry, the purpose and usage of
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| | On the other hand, if the loan
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| the loan, the proposed repayment
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| | application is submitted for a new
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| conditions as well as the intended loan
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| | business, a pro-forma balance sheet and
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| period. After that, the company
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| | profit and loss account should be
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| information is provided, enriching the
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| | provided. Apart from that, a cash flow
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| reader with the nature of the business,
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| | projection for the upcoming year is
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| the location of the business, company
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| | drafted to indicate the possibility of
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| history, the products or services
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| | recovering the debt. This also means that
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| provided, key differentiation factors of
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| | projected revenue, profits, costs
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| the company or the product, the general
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| | incurred and expenditure should be listed
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| growth of the industry, competitive
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| | out with definite explanations provided
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| information, growth potential and target
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| | as well as a list of assumptions.
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| customers.
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| | If you possess assets that you wish to
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| It would help if you could include your
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| | use as collateral for your loan, details
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| company marketing strategy, detailed
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| | for this should be provided to the lender
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| product information, historical
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| | as well. It is often common for lenders
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| information as well as projected growth
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| | to request for dual sources of repayment
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| plans for the company. Apart from that,
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| | in the event that one source is
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| if you plan to incorporate product or
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| | defaulted. This means that if the
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| service extensions in the future, you
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| | business owner defaults on his
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| should provide these descriptions within
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| | repayments, the collateral can be sold in
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| your loan proposal. If possible,
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| | order to recover debt.
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| geographical expansion plans will help in
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| | Finally, other documents normally
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| the proposal.
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| | required for a loan application would be
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| The next area that needs to be showcased
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| | items like the article of incorporation,
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| in the proposal would be the credentials
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| | lease agreements, partnership agreements,
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| and experience of each member of the
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| | license, references, etc. As the list of
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| management team. Impressive credentials
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| | required documentation, information and
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| will provide assurance to the lender that
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| | attachments differs between lenders, it
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| the company is managed by individuals who
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| | is best to check with the individual
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| are responsible and capable. This is
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| | lender on their specific information and
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| important as having the wrong people
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| | documents required to be attached with
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| managing the company could be detrimental
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| | the loan proposal.
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