Need loans to grow your business? There are plenty of options when it comes to business loans regardless of the size of your business. However, there are plenty of requirements that come along with it as well. Generally, you will need to have a good credit score with a minimum of about 600 in most cases. Other than this, you will surely need to meet the requirements of the lender you’re looking to get the loan from.
While some lenders do not ask for additional documents if the size of the loan simply doesn’t require it, some surely will do. The most commonly asked documents proof of income such as bank and profit and loss statements. You may also be asked to bring the prior year’s tax return transcripts. These are usually asked for a borrower with good credit. Those with bad credit can see the commonly required documents below.
Before you take a look at the required documents, learn what your credit score is and compare it with the list below. If your credit score is considered good, you probably only need to provide bank statements or tax return transcripts. That is of course assuming your available credit is enough.
Credit Score Bad to Excellent Ratio
- Excellent Credit: 750 and more
- Good Credit: 700 to 749
- Fair Credit: 650 to 699
- Poor Credit: 600 to 649
- Bad Credit: 600 and less
As for the documents asked for business loan borrowers with bad credit, it really depends on the type of loan. For example, if you need to borrow a business loan for the purchase of equipment, you are likely to be asked to provide business history.
But for the most part, borrowers with bad credit are usually requested to provide financial history (3 to 12 months), invoices from paying customers, assessment by a peer lender, or business history. Again, depending on the size of the loan, the lender may ask for additional documents. These can be anywhere from other type of financial statements for your business to individual reports.