What’s the purpose of preparing a loan submission package? When applying for a loan, you must provide the lender with a loan package. Alongside a business plan, a loan package is a documentation presented to a lender for review in order to determine whether to approve your request.

It may sound simple enough to do, but it takes organization and a clean presentation to boost your chances of approval. Here’s how to prepare a winning application.

Information to Provide When Applying for A Loan

All lenders will want to know certain things about your application. These are;

  • The amount you want to borrow
  • The purpose of the loan
  • When you need the money
  • How you will repay the loan
  • The type of collateral you have
  • Whether you have personal guarantors

How you answer each of these questions will determine whether or not you’ll get the loan. One other thing; you must provide written documents to support each claim.

Below are some of the relevant documents you’ll need to provide.

Documents to Include in Your Loan Submission Package

When applying for a loan, a verbal assurance isn’t enough. You need documents to support what you say. If you’re borrowing for your business, you’ll need to prepare a few things in your loan submission package;

  • Profit and loss statement – shows how much profit your business makes by deducting expenses from income.
  • Balance sheet – it shows the net worth of your business by deducting liabilities from assets.
  • Cash flow statement – shows your liquidity by subtracting cash outflows from cash inflows.

You may have to present the above statements for the last 3 to 5 years. And if you’re starting a new business or project, you’ll need to prepare projected financial statements and a business plan. For personal borrowings, you may have to prepare a personal financial statement. This document shows the value of your assets, liabilities, and your net worth.

How the Lender Will Assess Your Loan Submission Package

Lenders use the 5C approach to assess and approve a loan application. The 5Cs are:

  • Character – your character depends on your credit history. Whether you’re a person who pays loans on time or a defaulter. Resolve any credit issues you might have before applying for a loan. For one, you can still qualify for a loan if you prove your past credit discrepancies were beyond your control. That said, a written document would help provide the required proof.
  • Capacity – do you have the capacity to repay the loan? Your ability depends on your income sources, such as salary or business profits. But remember, you can’t pay a loan using 100% of your income. That’s to say; you must be able to pay your personal expenses and other debts you may be owing.
  • Conditions – lending conditions include the repayment period, interest rate, and amount per installment, among others. The lending conditions will depend on the lender’s policies and what you agree with them.
  • Capital – it’s the amount of capital you put into the investment. The lender won’t give you 100% financing. Some will specify the minimum amount you must put in. But you can contribute higher than the minimum. And the more you chip in; the more likely the lender will approve your loan.
  • Collateral – lenders want to minimize risk as much as possible. So you’ll need an asset they can consider as collateral if you fail to repay the loan. Sometimes, the asset you want to buy can be collateral, like mortgages. Another aspect has a guarantor who will agree to repay the loan if you default. In most cases, you need both a guarantor and collateral.

Submit a Complete Package

A loan submission request should address all questions the lender has about you. Keep in mind different lenders may have slightly different requirements. Everything considered, emphasize your ability to repay the loan, provide sufficient documents, and be realistic with your applications.

Contact Goode Bookkeeping & Consulting 

Get in touch with one of our bookkeeping experts to learn more about loan submission packages. We’re happy to answer your questions and walk you through how loan submission package can be prepared. Contact us to find out how we can tailor our services to best suit your needs. You can reach us at (860) 659 6543 or complete our Contact Form to schedule your free consultation.