when you want to apply for a loan the bank requires a number of things from you before they can grant you the loan. the following covers a list of things they look out for.

  • A loan document checklist – this is a list of the documents you will typically be required to submit when you apply for a loan.
  • The 5 C’s of credit, which lenders use to assess your creditworthiness when reviewing your application.

Loan document checklist 

    1. Audited financial statements (include your Income Statement and Balance sheet)
    2. Latest Management Accounts
    3. 6 months Bank statements (personal and business)
  2. BUSINESS REGISTRATION DOCUMENTS: These are the documents that are issued to you when you have registered your business with the authorities in your country. Example:  Copies of memorandum and articles of association and Certificate of incorporation.
  3. YOUR BUSINESS PLAN: This needs to be well written and thorough – showing industry analysis, competition, forecast, cash-flow projections and financials. Also attach your CV, lease agreements and Identity documents.


Loan Check List




(Here outline the  

specific documents you  already have and those  that you might still need  to get)

Latest financial statements Most banks will request for  audited financials e.g. May-August  

Financial statements  available 

Still need to get Sept Dec

Management accounts and  pro-forma balance sheet Required if financial

statements are older than  6 months

Business Bank Statements 3 -6 months
Personal Bank Statements For the last 3 months for all  partners
Personal financial


This may include home loans and ownership of  other assets
Business Registration


Sole proprietor will need a  written confirmation of  earnings from an


For a limited company:  proof of identity of the  limited company, copies of  memorandum and articles  of association, certificate of  incorporation, board

resolution, copy of annual  return establishing the  shareholding pattern.

12 month Cash-flow

projections with


Attach to your business  plan
Business Plan with CV of  Business owners Add CV as an addendum to  your business plan
Lease Agreement Required if you are renting  the space you operate


from. If you own the

business location, then the  bank will require proof of  ownership. If you work  from home, you

Identification Documents Government Issued

Identity Document


Other tips:

  1. Suggest using a flip file to submit these documents in
  2. Create a table of content, with the document title and page number


Whether you are applying to a bank for a line of home equity credit, a  line of credit for business working capital, a commercial short-term loan,  an equipment loan, real estate financing, or some other type of  commercial or consumer loan, many of the same basic lending  principles apply. The most fundamental characteristics a prospective  lender will want to examine are:

  • Credit History of the Borrower: Before you apply for commercial credit, you should  review a credit report on your own business, if your business has been in  existence for a while.Most conventional lenders will expect a minimum of four or five trade  experiences listed on a business report before they consider the business’s  creditworthiness. If you have been operating your business without credit, or  with personal assets, you should consider making some trade credit  purchases in order to establish a credit history for your enterprise. If you can, find out which credit reporting company your  prospective lender uses and request a report from that company.
  • Cash Flow History and Projections for the Business: The cash flow from your business’s operations — the cycle of cash flow, from  the purchase of inventory through the collection of accounts receivable — is  the most important factor for obtaining short-term debt financing. A lender’s  primary concern is whether your daily operations will generate enough cash  to repay the loan. As most lenders are aware, cash flow also presents the most troubling  problem for small businesses, and they will typically require both historic and  projected cash flow statements
  • Collateral that is Available to Secure the Loan: Collateral may be defined as property that secures a loan or other debt, so  that the property may be seized by the lender if the borrower fails to make  proper payments on the loan. When lenders demand collateral for a secured loan, they are seeking to  minimize the risks of extending credit. In order to ensure that the particular  collateral provides appropriate security, the lender will want to match the type  of collateral with the loan being made.
  • Character of the Borrower: The weight given to a lender’s assessment of a borrower’s character can vary  tremendously between lending institutions and between individual lending officers. Many  small businesses have found more success “selling” their reputation and good character  to smaller community banks who may be more directly affected by the economic health  of the surrounding community.  One additional factor that many banks consider as evidence of a borrower’s “character” is  the amount of investment that the owners themselves are committing to the business.  Many commercial lenders want the owner to finance between 25 percent to 50 percent of  the projected cost of a startup business or new project. An insignificant investment by an  owner may suggest a lack of both owner confidence and dedication to the business.
  • Loan Documentation: a personal financial statement (usually lender’s own form) and personal federal  income tax returns (one to three years) , projected startup cost estimates ,  projected balance sheets and income statements for at least two years 🞆 projected cash flow statement for at least the first 12 months . evidence of ownership interests in assets (e.g., leases, contracts) and collateral , a business plan that includes a narrative explaining the specific use for the   requested funds, how the money will assist the business, and how the borrowed  funds will be repaid (repayment sources and duration of repayment period).


  1. Keep in mind that to stay in business banks need to make loans: Do not be afraid to ask for one.  That is what the loan officer wants you to do. To increase your chances of getting a loan, look for a bank  that is familiar with your industry and who has done business with companies like yours. Seek out banks  that are active in small business financing.
  2. As an entrepreneur, make sure that you are thoroughly prepared when you go to your  banker’s office to request a loan: You need to show your bankers that a loan to you is a low-risk  proposition. Have on hand a completed loan application, copies of cash flow and financial statement  projections covering at least three years, and your cover letter.
  3.  Learn to anticipate every question that he or she has:  Remember, the combination of information  and preparation is the most powerful negotiating tool in the world. A confident and thoroughly prepared  borrower is four times more likely to have his or her loan approved than a borrower who does not know  the answer to some of the basic questions a banker asks. To show the extent of your preparedness,  your business plan should also include answers to your banker’s questions
  4. Do not stretch the truth in your loan application: Broad, unsubstantiated statements should be  avoided. The lender can easily check many of the facts on your application. If you cannot support  statements with solid data, then don’t make them.
  5.  Ask someone to give you a good referral: To improve your position as you change bankers and  banks, the best way is to ask for a referral from a successful entrepreneur. Before you decide to  approach a bank directly, find an associate, friend or acquaintance that is in good standing with the bank  to give you a good referral. Bankers tend to deal more favorably those who were referred to them by  their best customers.
  6. Failure to discuss risk in your application:You must remember one thing: there is no business  without risk. If you do not discuss risk, the bankers will assume that you haven’t thought about risk. Let’s  face it – try as we might, we cannot plan for everything, for every contingency, for every turn of events.  Bankers would want to know if you have planned for the major risks and how you intend to manage it.  Then, there is also the risk of too much success. The demand for your products or service may exceed well  beyond your expectations, and they would want to know how you intend to handle success.
  7. Remember that the first loan is usually the hardest to get: Bankers prefer to lend money to  borrowers who have borrowed at least once and have paid back at least one loan on time. They are not  venture capitalists that make high-risk loans regardless of the profit prospects of your business. Bankers  prefer to lend to low-risk, low profit ventures than to high risk businesses or those with no record of  accomplishment.


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