What Information Will You Need for Small Business Financing?

8 min read • May 02, 2022 • Tanner Cupello

More than 30% of American small businesses are not approved for at least some of the loan, line of credit, and/or cash advance funding they apply for.

Reasons for this can range from a poor business plan to an unrealistic valuation to a questionable founder. But what really shouldn’t be a concern is flubbing the preapproval process by not having the required documentation.

If you’re concerned that you might fall into that category, read on—these are the answers we give to the most frequently asked questions about the documents you’ll need to apply for a small business loan or other financing.

Which documents will you need to apply for business financing?

The first thing you’re going to do when you apply for financing at Lendio is give us enough information to help our lender network assess your risk. When you click “Apply now,” you’ll start our 15-minute online application.

You’ll need the following documents:

  • 3 months of business bank statements (you’ll be given the choice to connect your account or manually upload images)
  • A copy of your driver’s license or state ID
  • Voided check from your business account
  • Proof of business ownership
  • Month-to-date transactions

You’ll also be asked to provide:

  • The amount of money you want to borrow
  • When your business started and some general information about your business
  • Your birthday and your social security number

BTW, Lendio will conduct a soft credit pull, but that won’t impact your credit score.

What documents will you need for the next stage?

After we receive your application, our financing network will review your application and we’ll let you know what you’re eligible for. Depending on the types of loans or other financing you’re being offered, you may need to provide some of the following documents before your financing funds. And you won’t be asked to guess at anything: your Lendio funding manager will walk you through all of this.

You may be asked to provide:

Tax returns 

These will objectively show lenders how much money your company makes, how much you draw from the business, and how much money you personally have in the bank.

Some lenders will want to see profit on your business tax return—and if not profit, then a clear path to profitability. They’ll want to know that you pay your taxes in full and on time. 

Business bank statements

You will have already uploaded 3 months’ worth, but some types of financing can require additional bank info. These documents are used to show lenders your cash flow patterns. BTW, these will need to be business bank accounts, not a personal account.

A business plan

Some lenders will request a copy of your business plan, which they may review from two angles. 

First, they’ll be looking at the legitimacy of both the problem your business solves and your solution to it, as well as how you plan to bring your solution to market and how you plan to make money from it. 

And don’t make the mistake of thinking that only apps and tech platforms solve problems. A hair salon could be solving the simple problem of there not being another hair salon closer than 6 blocks away, and it’s a perfectly sound solution to a perfectly reasonable problem.

Second, they’re looking for a good fit, both from your business and from you, and this could mean different things. You may not be a good fit if:

  • They have a different idea of how you should be growing
  • They don’t share enthusiasm for the category you’re in
  • Any of a number of other reasons

Also, don’t worry about not being a good fit, however. Lendio works with 75+ lenders, which opens up a lot of options.

P&L statement

A lender may ask to see your profit and loss statement or other documents that indicate your cash flow like a balance sheet or a debt schedule. Your accounting software can help you gather these documents.

Business license and related documents

If you didn’t previously upload your business license, you may be asked to by some lenders to provide it now. You could also be asked for a copy of your LLC or articles of incorporation, if relevant.

Will Different Lenders Want Different Documents?

Different loans and financing have different requirements as do some lenders. For example, if you’re working on financing with a more traditional bank, you could be asked for as many as two years of tax returns, both business and personal; profit and loss (P&L) and balance sheets; a debt schedule; and sometimes more.

If you have your heart set on a Small Business Association (SBA) loan, you’ll be asked for the following information:

  • Why are you applying for this loan?
  • How will the loan proceeds be used?
  • What assets need to be purchased, and who are your suppliers?
  • What other business debt do you have, and who are your creditors?
  • Who are the members of your management team?

If any of these seem confusing, don’t worry. If you apply for financing through Lendio’s marketplace, your funding manager will explain any additional documentation required and you’ll upload everything in your online document center, so you’ll have a record of what you’ve submitted and what’s still missing.

FAQs about applying for small business financing with Lendio

Q: Will it be difficult to get financing if I haven’t been in business very long?

A: “Amount of time in business” can be important to obtaining financing, but how important and how long you need to be in business will really depend on the lender’s preferences as well as the financing option you’re being offered. A startup, for example, may qualify for a merchant cash advance with minimal time in business provided their receipts fit the lender’s requirements. Your best bet is often to apply for financing (remember, it only takes 15 minutes and doesn’t impact your credit score) to see what’s needed. 

Q: Do some lenders have different requirements for the same type of loan?

A: Yes, some lenders have different requirements for the same type of loan. Your Lendio funding manager will walk you through all of this and can help you determine which documents you’ll need after you submit your online application and if there are other options available.

Q: If I don’t have a specific document, can I offer a substitute?

A: If you don’t have a specific document, whether you can offer a substitute will most likely be up to the lender’s underwriter. Your Lendio funding manager can help you determine if there’s a suitable substitute or even how you can access the documents you need.

Q: If I’m missing some documents, should I still apply for small business financing? 

A: My advice: apply online to see what type of financing is available based on the information you can supply. Our lender network offers more than 10 different types of financing, so the required documentation can vary widely.  

 

 

Disclaimer: The information provided in this blog post does not, and is not intended to, constitute business, legal, tax, or accounting advice. All information, content, and materials available in this post are for general informational purposes only. For advice specific to their situation, readers should contact their attorney, business advisor, or tax advisor to obtain advice with respect to any particular matter.

Tanner Cupello

Tanner Cupello is the director of Lendio's financing marketplace. When he's not helping small businesses connect with the capital needed to do great things, he's wake surfing, snowboarding, or hanging with his dog, Scout.