Each loan program has its own paperwork, but by assembling the documentation and information that will be typically required for most of them, you can make the process more streamlined.

• Personal background. This can include previous addresses, other names used, criminal record, education and other pertinent information about the borrower.
• Resumes. This may be required to show that the borrower has business or management experience, especially when applying for financing to start a new business venture.
• Business plan. This should comprehend projected financial statements with profit and loss, cash flow, and balance sheets.
• Credit reports. Borrowers should check both personal and business credit reports for inaccuracies or blemishes before submitting loan applications.
• Tax returns. Lenders will typically request income tax returns, both personal and business, for the previous three years.
• Personal financial statements. In addition to the financial statements in the business plan, borrowers may also need to provide individual, signed statements from any owner with more than a 20 percent stake in the business.
• Bank statements. Applications typically require one year of bank statements from personal and business accounts.
• Collateral. This should outline any business assets or property that will secure the loan. High risk loans will generally require more substantial collateral, while a strong business plan and financial statements can reduce the amount of collateral required.
• Legal documents. There are myriad documents that lenders may require. The most common are: necessary business licenses and registrations, articles of incorporation, copies of any third-party contracts, franchise agreements, and commercial leases.

There is however a potential “Catch 22” problem.  In many cases the SBA lender will require a 12 to 18 month operating history before approving the loan.  However, without a building you can’t have a place to operate a business and thus have an earning history. But, without an earning history you can’t get a loan to buy the building!  Working with a Colorado hard money lender such as Montegra – who using its asset based underwriting guidelines – does not require an operating history may solve this “Catch 22”.  Once the borrower is able to purchase the property and start their business then in a year or so they can reapply for an SBA loan with better prospects for approval.

This blog was written by Bob Amter, President of Montegra Capital Resources, LTD., a Colorado hard money lender.  [google_authorship] has been in the private capital lending business for 41 consecutive years.