The business
- Business tax returns, last 3 years
- Year-to-date profit and loss statement
- Current balance sheet
- Schedule of existing debts
- Accounts receivable and payable aging
- Entity documents and ownership list
Capital Library · Readiness
Capital readiness
Lenders, investors and grant programs all ask the same questions. Have the answers ready and you get faster decisions, better terms and fewer surprises.
Document checklist
What a lender will ask for.
Exact lists vary by lender and program. This covers what most will want to see.
The owners
- Personal tax returns, last 3 years
- Personal financial statement (SBA Form 413 for SBA loans)
- Resumes showing industry experience
- Government ID for each 20% or greater owner
- Explanation of any credit issues
The project
- Business plan or project summary
- Use of funds with quotes and estimates
- Monthly projections for 2 to 3 years
- Lease, letter of intent or purchase agreement
- Equipment and construction quotes
- Proof of your cash injection
Debt service coverage
Can the business carry the payment?
Most lenders look for at least 1.25x: for every $1.00 of annual loan payments, $1.25 of cash flow available to pay them. Try your numbers.
1.67x
Meets the common 1.25x guideline
At 1.25x, this cash flow supports about $320,000 a year in loan payments ($26,667 a month).
Use of funds
Show exactly where the money goes.
A simple table like this, backed by quotes, answers the lender's first question. Example figures are illustrative.
UseExample amountBacked by
Building improvements and build-out$650,000Contractor bid
Attractions and installation$480,000Manufacturer quotes
Arcade games and redemption$220,000Distributor quote
Kitchen and bar equipment$140,000Vendor quotes
POS, cards and technology$60,000Vendor quotes
Opening inventory and supplies$45,000Opening budget
Working capital reserve$150,000Projections
Total project$1,745,000Owner injection plus financing
Credit
What lenders look at.
Personal credit
Owners' personal scores still matter for most small business loans. Check reports for errors months before applying.
Learn moreBusiness credit
Dun & Bradstreet, Experian and Equifax keep business credit files. Paying vendors on time builds them.
Cash flow history
Lenders want to see that the business, or the owners' track record, can cover the new payment from historical results.
Questions to ask
Ask every capital provider.
Cost
- What is the APR and the total cost over the full term?
- What fees are charged at closing and over the life of the loan?
- Is the rate fixed or variable, and what is it tied to?
Terms
- What collateral and personal guarantees are required?
- Is there a prepayment penalty?
- What covenants or reporting will I owe you?
Process
- What is the timeline from application to funding?
- Who is my day-to-day contact?
- What would make you say no?
Keep exploring
More of the capital library
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Independent information. Your decision. FEClife is not a bank, lender, broker, tax adviser, investment adviser or grant administrator. Programs, tax rules and provider offerings change; confirm current details with the program, the provider and a qualified professional before making decisions.