Guide to Business Loans: How to Prepare and Get Approved

business loansChoosing the right business loan is leverage to grow your company in a time and cost efficient way.

Many entrepreneurs lack the liquidity to pounce on time sensitive opportunities, such as acquisitions or bulk supplier discounts. A business line of credit is readily available capital to earn money or cut costs, in these ways. A well-capitalized business can also meet payroll if invoices go unpaid or emergencies arise.

There are many financing choices to meet short or long term borrowing needs. The business loan process is more efficient with basic preparation. This includes taking a lender’s perspective on what strengths and shortfalls your business may have.

Here is a checklist of what to prepare and anticipate.

2 years of Business and Personal Tax Returns

Banks prefer an established history of results. Two years of personal and business tax returns give lenders a snapshot of how your business is trending. If you own a start-up or new business strong personal credit and extensive collateral may be essential.

Best Practices:

Lenders primarily use numbers to determine your capacity to repay. Net income, debt and credit score are closely evaluated. Loan underwriters should ideally ‘connect the dots’ to explain discrepancies.

However, high volume and limited authority may cause some aspects of your application to be overlooked. Some best practices to improve your odds of approval include:

  • Determine if your business loan officer is also the underwriter. Many underwriters have leeway to make decisions on borderline applications.
  • Be sure to anticipate potential questions that your tax returns may raise. Interest and depreciation expense are write-offs that lower net income. Noting this may address an underwriter’s concerns about profitability.
  • Did your company have a one-time charge off or loss that deflated numbers? A busy underwriter may overlook this when reviewing your loan package. You should be aware of what factors positively and negatively affected performance. This could help you influence loan decisions.

Tip: Be prepared with alternatives based on your needs. You may use strong personal credit for a business credit card. Specific purpose loans offer easier qualifying. Examples include equipment loans and restaurant or nightclub financing offered by online lenders like

Bank Statements for past 6 months to 1 year

Loan officers prefer ‘seasoned’ bank balances. This ferrets out borrowers who have short term infusions of cash from friends or family to improve their financials.

Tip:  Anticipate and prepare for questions on spikes or dips in balances. A rational answer to a large influx of cash a month earlier will be helpful. Perhaps a large A/R was paid or you just acquired a lucrative client. You should have documentation of this ready, if needed.

Current Income Statement

Income statements are a summary of how your company is currently performing. Business dynamics frequently change. Companies may have lost large clients or market advantage since their most recent tax returns.

Tip: Prepare the most recent income statement possible, even if not favorable. Why? Lenders will recognize attempts to provide outdated information. Providing incomplete data only delays the decision and your chance to pursue alternatives.

Balance Sheet

How your assets and liabilities are comprised is important. Can your business quickly turn assets into cash?  Are your liabilities short or long term? A balance sheet gives details of your business finances.

Tip: Your balance sheet also gives insight into the best loan options. For example, if you have high accounts receivable, A/R financing may be an option for short term cash. Fully depreciated and outdated machines may be incentive for equipment financing. You can increase productivity and have possible tax write offs with new equipment loans.

Business and Personal Credit Checks

Your payment history under a business tax id and/or social security number will be checked.

Tip: Minimize surprises by knowing what is on your credit reports in advance.

No credit business loans meet short term needs until credit is established. Examples of financing that require no or minimal credit includes:

  • Merchant Loans
  • A/R Factoring
  • Niche Industry Financing
  • Equipment Lending


To improve your chances of getting approved for a business loan you need to thoroughly prepare. Ask what type of documents you need before applying for a loan.

Preparing financials for a business loan has other benefits, too. You also gain perspective on making more informed decisions.

Photo Credit: anankkml

Review: is an online financial service aiming at small businesses with 10 or less employees. It promised seamless cross-platform features for the business owners on the go. However, under careful scrutiny, a lot of the features fell short of the promised usability.

My first impression of wave was not positive due to the design choices of using picture icons instead of words for different sections and to have a vertical menu on the left hand side of the screen. From top to bottom, the icons are for Dashboard, Transactions, Invoices, Bills, Receipts, Accounting, Reports, and Payrolls.

I was rather lost when I first logged on. I was not sure where to start and what to click on. Even after I finished reviewing the website, I still could not remember which section was which just by looking at the little pictures. In addition to that, I found myself constantly having to drag my mouse cursor a long way across the screen to the left to access the menu. This was the reason that most websites and software mainly used horizontal menus at the top of the page.

wave apps review




The second pet peeve I had was that the dashboard not only did not easily fit on one screen, but also required significant scrolling. The dashboard was split into two even windows: recent activities and financial snapshot. Since financial snapshot included four groups of information, “Income and Expenses”, “Payable and Owing”, “Net Income”, and “Business Expenses”, it occupied significant more screen area. The result was such a long dashboard that it defeated the main purpose of giving users a quick glance of their status.


The third annoyance I had while using the website was a small but very intrusive window which kept popping up on the lower right hand corner of the screen. It was asking for customer feedback and there was no way to turn it off.  However, as I was writing this and needed to take a screenshot, it was nowhere to be found.

The key features of Wave included transaction records, invoice, bills, and receipts. Transactions could be added individually or in bulk by connecting to bank accounts or uploading a bank statement. Once I clicked on the “Add bank account” button, Wave presented me with the security employed to keep my banking information and my money secured. This is the fifth online bookkeeping services I had reviewed and they were only the second website out of five that actually included such information and assurance. dashboard

The transactions could be in US dollar as well as a wide range of other currencies. They could be transferred to different accounts and merged from existing transactions.

 wave app review 4

 The “Invoices” and “Bills“ sections were self-explanatory and easy to use. My favorite features were the two boxes at the bottom corners of both pages: one on the lower left corner to choose how many lines to display per page and one on the lower right corner to jump directly to a certain page. This made the lists more fluid and faster to navigate as they would grow longer with time.


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Wave also included advanced features such as Accounting, Reports, and Payrolls which I did not test due to the limited time and data I had.

There were multiple ways to file receipts on Wave. From the website, I could upload a picture file of the receipt. There were also iOS and Android apps available for filing receipts on-the-go, and an email address to forward the receipts that I had lying around in my email inbox. This was the most elaborate system of receipt filing I had have encountered and I had high hope for it but it did not work very well. I snapped a picture of a receipt from the iPhone app. The picture was synced to the website fairly quickly but the processing was completely wrong as shown below.


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While the receipt filing system was an interesting extra feature, the lack of a dedicated page for contact list management and list of products and services was puzzling. Contacts (customers and vendors) could be added as I added the expenses and payments. Items (products and services) could be added as invoices were created. However, no master list was from such information. No option to import or export the list. Wave was the only bookkeeping service that had chosen to leave these out and I thought that was either a huge oversight or a very unfortunate design choice.

Last but not least, wave accounting app was free to use. There were charges for added on services such as payroll or accepting credit cards payment on invoices. Otherwise, it was not clear how the company made money while providing the service. This made me uncomfortable as I was not sure whether I was trading my information for the free service I was getting, or whether the company was trying to get me to use it before rolling out a paying model that I would not like in the future. Wave was one of two out of the six websites that I reviewed that had this business model.

In summary, while Wave was a free service with a reasonable list of features and decent usability, I did not think it would be my online financial service of choice.

Have you ever tried

Check out what we think of other small business accounting services.

Review: Quickbooks Online

QuickBooks Online was Intuit’s low cost answer to the growing market of online book-keeping services for small businesses. For a monthly subscription fee, it contained the accounting features that a small business owner would need such as transactions reconciling, creating and issuing invoices, and creating checks, etc…

QuickBooks Online (QBO) products for small businesses included three tiers of membership: Simple Start for $12.95/month, Essentials for $26.95/month, and Plus for $39.95/month. This was about the same pricing as other online book-keeping services that I tried out. Since all other services that I used had the option for multiple users, I picked the QBO Essentials for the best comparison.

 quickbooks online

Even though the promise was to “try it free for 30 days”, I seemed to be heavily pushed not only to commit to the original paid service but also to add on extra features, much more than what I was used to from all the other trials by other online book-keeping services.

There was a green top headline with the countdown clock for the number of days I had left in the trial. It was there no matter where I navigated and there was no way to close it. Then there was a pop-up window that appeared every time I went back to the home page, to give me the 50% off rate for the first six month.

In addition to that, everywhere I turned inside the website all the features would cost me extra. Payroll was another $39/month. Time tracking for my employees would be another $39.95/month. Wanted to save time and printed checks from QBO? That would cost extra too. Even though I understood that Intuit was a well-known name in the book-keeping business with a large library of sophisticated tools available, I felt like whatever I would pay would not be enough.

 quickbooks review

 online bookkeeping

The websites consisted of eight sections; each of these sections in turn would have sub-folders as well:

  • Home
  • Company
  • Customers
  • Vendors
  • Employee
  • Banking
  • Reports
  • App Center

Unlike other book-keeping services, the Home page did not give users a quick glance of the company financial status.  It had a to-do list, a Messages center, and quick links to what it deemed as popular actions: create an invoice, create a sale receipt, enter a bill, and write a check.

 qb 4

While the Getting Started tab showed users a few training videos and guides, I was much more interested in the chart on the Getting Around tab. It showed what QBO tracked and how all the features were related to each other. All the icons were clickable to bring users to the features. I wish this was on the home page as it was the most helpful training materials I have found for all the online book-keeping services.


The Company section contained information about the company and how to monitor, import, and export data, such as contact information, chart of accounts, sale tax, additional user information, and products and services list. Not everything listed was actually usable. When I clicked on “Create Budgets”, I got an invitation to upgrade to Plus (the next higher tier of membership) to use that feature.



It was when I encountered a long sub-menu under Company that I realized the value of the “Rearrange Menu” option. It was available for every sub-menu on the website and it allowed me to choose the order and grouping of the available features, especially when not all of them could be visible on the horizontal sub-menu bar.


The remaining sections were fairly standard. Customers and vendors were where the majority of monetary transactions going in and out would be recorded. Employees section had options to set up payroll (for an extra fee) and time-track (for another extra fee).

Banking contained information of various accounts. Under Reports, there were a number of reports and score cards that could be generated. App Center had a list of add-ons, from both Intuit and online third party developers. The website was responsive and everything worked as intended.

In summary, Intuit’s QuickBooks Online Essentials was a good choice for an online book-keeping service with a decent list of features and fairly ease of use. With the name recognition that they had, I was the most comfortable with giving them my financial information compared to other new players.

However, the constant push for additional functions instead of highlighting the available ones could quickly become a turn-off to customers and did a disservice to a solid piece of software that it was.

Have you ever used QuickBooks Online? What are your thoughts on it?

5 Low Cost Advertising Ideas for Your Small Business

5 Low Cost Advertising Ideas for Your Small BusinesWhen it comes to maintaining a successful business advertising plays a large role. And since most startup businesses have small advertising budgets it’s important to make your dollars stretch.

Here are five low cost advertising ideas you can use for your business.

Social Media

When done right social media is a great way to attract customers to your business. You can place ads on social media sites like Facebook and Twitter on a small budget and attract many followers.

If you already have a large social media following you should actively engage in conversations with your customers. Create polls, ask questions, and hold contests.

Be sure to also post interesting information on your page. You want to relate to your customer base as much as possible.

Promotional Products

Promotional products like pens, magnets, and even chip clips can be a great way to keep your business on a potential customer’s minds.

You can get promotional products on a relatively low budget a places like The Pen Warehouse. If your business has a physical location you can leave these products at the front desk or pass them out at fairs, carnivals, and other community functions.

Business Cards

Business cards can be the ultimate low cost advertising solution for your business.

There are many places online that will allow you to create your own business cards and pay only the price of shipping to receive them. The next time you’re at a social event or come across someone who might need your services hand them a card.

Start a Business Blog

Blogs can bring a lot of online traffic to your business website. It costs less than a $100 a year to start a blog so there’s really no excuse not to. And if you don’t like writing you can hire a writer or ask a staff member to help you out.

It will take time to draw  traffic to your blog but if you are consistent you’ll eventually see the rewards a blog can bring.

Hold a Contest or Giveaway

Contest and giveaways can bring a lot of attention to your business. Offer a free product or service to one lucky contest winner, hold a drawing, or offer a coupon to repeat customers.

Promotions, especially the type with big rewards, will attract a lot of new potential customers. Consider a promotion as an investment. If you’re able to run a successful giveaway it can pay you back tenfold with new business.

Final Thoughts

Just because your business has a small budget doesn’t mean you can’t advertise. Some of the best advertising forms out there won’t cost you a dime.

What type of advertising do you do for your small business?

Five Tips for Financing Your Startup with a Personal Loan

startup fundingStarting up a business is exciting, and you’ve likely been thinking about it for some time now. However, getting the money to do so can be more of a challenge – especially as banks are reluctant to lend to startups and getting angel or VC funding is not for everyone. What options are there then? Well, you could finance the new business with your own cash or personal lending. If you are planning to take out a personal loan for your company, what are some tips you need to keep in mind?

Consider The Approval Process

Gathering all of the sources you need and planning out your business with care and precision will all be for naught if you are unable to actually get approved for the loan. You must start thinking about the loan well in advance. Work to get yourself into a favourable lending position. For example, aiming to pay off those credit cards, or at least some of them, before applying would be wise. And start early. Talk to your bank long before you are going to need the money because it can be a long process from application to approval. Also, don’t necessarily stick with whoever you already bank with. Banking, even commercial banking in 2014, is competitive. So before marrying yourself to a bank, shop around. Banks like Clydesdale Bank in the UK are open to business as are Chase, BoA and Morgan Stanley are worth a try in the USA. Don’t forget there are other options too such as P2P lenders and local credit unions. There are options: use them!

Save What You Can

The fact that you can obtain a loan to help you with your business is wonderful. However, this does not mean that you need to take out the most tremendous amount of money possible. Be reasonable with your expectations. While you are planning out how you will get approved for the loan, you should also be working to save up as much money as you can. Doing so ensures that you do not have to take out as large of a loan as you once would have. Use a tool like inDinero to better manage your incoming revenue and outgoing payments.

Consult with Business Partners

Certainly, some people do start companies by themselves, but many need a partner to help keep things afloat. You should be having serious conversations with your partner about the loan, and you must both remember that this is a business transaction. The both of you need to go on that loan as co-signers. As a result, your business partner must also have a healthy financial history or he or she could prevent you from getting approved.

Frame Your Payment Plans

You should be meeting with a professional to determine at least the approximate cost of your monthly payments, and you must determine if these amounts are feasible for you. Predicting the exact success your business will have is very difficult, so you need to be prepared. You do not want to find out that the money is unavailable to pay the loan. Think about what you can reasonably afford in terms of this loan, and set up a plan for how you are going to pay it.

Pay Back The Loan

Many people are so excited when they first get a loan that they really do not think about paying it. Remember, you must make sure that you send these payments in a timely manner each month. Failure to do so means that you are not only risking your personal credit score, but the success of the entire business as well. If you are comfortable with doing so, consider automatic withdrawals so that you do not need to worry about the payments.

Financing a business is definitely an exciting task, and you can make the process better by following these tips and suggestions.