Compliance basically means that you are doing everything in your power to make your business as credit worthy and prove your business fundability by complying with all aspects important to a lender. Everything in a lender’s list of requirements is geared to make sure your business has the ability, now or in theory, to repay a loan and the disposition to do so.
A part of being compliant is geared toward proving your business actually exists and enjoys a good reputation as well. Like in your personal life, your businesses reputation speaks a lot about its morality and desire to make payments.
In other words you need to prove adequate income or a reason to believe there will be enough income in the future to make your loan payments, and that your business has a good track record of reliability.
How to Prepare for a Business Loan
In order to show your business fundability you need to be prepared to present certain documents. Provide your prospective lender with your business plan, your financial statements for at least two years, or as long as you have been in business and proof of incorporation as well as licenses and permits needed for your locale. You will be asked for all pertinent contact information such as address and phone number. To present a solid appearance, your address should be an actual street address not just a P.O. Box, and you should have a listed phone number. It is better to have a landline telephone even if you use a cell phone for most of your communication, however if you use cell service exclusively make sure it is a contract phone that will have your business name associated.
Without exception you need to acquire an EIN number. This is an employer identification number given as a tax reference to businesses by the IRS. It is a simple process to register your business with the IRS, and it can be completed online on the IRS website. In Step 1 of the Business Fundability System, you will be walked through these necessary steps in order to be lender compliant.
Even if you have never had a previous loan in your business name, establishing a bank rating is essential and surprisingly easy to do. All you really need to do is open a bank account in your business’ name and keep that account in good standing for at least 3 months. The longer you keep your account open and show normal operations in the form of making payments on accounts and making regular deposits the better your rating will be.