Securing a bank loan in 2019 requires more paperwork than it did before the Great Recession. Today, most lenders are thoroughly vetting candidates before authorizing a loan request. This is a precaution aimed at ensuring that borrowers can afford to pay off the loans they take out.

Learn more about the business loan documentation you will need (Source: Pixabay)

Whether you are an entrepreneur planning to expand your business or to fix a cash flow problem, you need to have the right paperwork to smoothen your loan review process. Here are the documents the bank will need to get a good sense of your approval odds.

Financial Statements

To assess your risk profile, the bank will request a copy of your recent financial statements. There are different documents in this category, and one of them is the profit and loss statement. This gives the lender insights on how your business is performing and where it is headed. 

Other statements that are required include cash flow report, financial projections, balance sheet, list of debtors, and list of business assets. Make sure the statements you present are error-free. To keep your records accurate and improve your accounting, utilize pay stub generators such as Mr PayStubs

Credit History

To understand the creditworthiness of a borrower, the bank needs to see a credit report. Before approaching the bank, get a credit report. Most reports contain an explanation of what is affecting your score, therefore you will know what is causing the damage. If the report doesn’t look good, there are options you can use to fix the score, as noted in The Balance

Work on improving your score by fully paying past dues, scrutinizing the document and having any inaccurate information removed, and maintaining your balances below 30 percent of the credit limit. Also, be prepared to explain any negative points that are in your report. 

Tax Returns

Although your tax return contains information that you most likely consider personal, lenders have a good reason to request for it. It helps them know you are fiscally responsible, and it acts as a layer of protection against bad loans. For the bank to verify your revenue, a tax return comes in handy. 

This document enables them to establish a pattern, and deem whether you are capable of repaying. For a bank to get your returns from the Internal Revenue System, you will need to sign a Form 4506-T. Note that without a tax return history, it is difficult for the bank to verify your revenue. 

Documentation of Collateral

If the type of loan you want to take out requires collateral, then you need hard assets to back up the loan. These guarantees increase your chances of getting a loan and receiving a larger amount. As security, a business owner may use assets like real estate, stocks and bonds, cash reserves, automobiles, machinery, collectibles or insurance policies, as noted in the Entrepreneur

The bank will ask you to produce titles of the assets you want to pledge as collateral. They then carefully examine the copies of the documents to verify the property is yours and that there are no competing claims. Ensure you have the original copies available.

Contracts and Legal Documents

The paperwork helps the bank to paint an accurate picture of your creditworthiness (Source: Pixabay

The lender will want to see your business incorporation documents. These should include information about company ownership, business structure, and franchise agreements. Other important documents include the original business license, contracts with third parties, and leases.


Although every lender has its own set of requirements, you need to be prepared to produce the necessary documents. The paperwork helps the bank to paint an accurate picture of your creditworthiness. By preparing all your documents, you will effectively enhance your chances of getting the right loan package.

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