The Definitive Guide to Getting Loan Ready

Are you considering applying for a business loan, but not sure about the process or what a lender will ask for?

First, you’re not alone. Many successful entrepreneurs have questions and encounter obstacles before they succeed in securing a business loan.

Second, this guide is for you! It will lead you through a series of steps designed to inform, empower, and support. While we present this as a linear process, feel free to skip around. Depending on your situation, the order of steps may vary and you may want to work on several at once.

This Getting Loan Ready guide is broken into several sections so you can pick and choose which apply to you and your business.

Most sections include links to pages with more detailed information, along with helpful resources and worksheets to guide your reflection and planning. If you're short on time, you can download a PDF version of the guide or subscribe to receive email updates below.

Either way, congratulations for investing in yourself and your business.

Empowering Entrepreneurs to Take Charge of Their Business Journey

Welcome! Before we begin, we’d like to explain how we approach supporting entrepreneurs like you.

We believe you are capable, creative, and resourceful. Rather than seeking to fix or correct a lack, we focus on empowering you so you can take charge of your business journey and chart your path.
We understand it can be lonely. When you are working hard to start or grow a business, it’s easy to feel alone. We strive to be a partner and an advisor. We also connect you to other resources so you can strengthen your network and build a team.
We understand we don’t all start in the same place. While we believe change is possible and we champion your growth, we also understand that entrepreneurs face different challenges and realities.

How do these beliefs shape this resource?

We breakdown a complicated and potentially overwhelming topic into smaller steps and components. We also always try to explain specialized vocabulary or terminology.
We point you to other resources and present multiple voices and perspectives. We hope some will resonate with you and be useful.
We let you choose your path through this material. Ultimately, this is your journey!

Unleash the Potential of Your Business with a Solid Plan

If you’re serious about launching or growing a business, a business plan is a must.

A business plan is a roadmap for you and any potential partners and funders. You’ll also likely need a written business plan if you are seeking funding for a startup, for business expansion or for a business less than 2 years old.

A business plan:

summarizes your business, how it is structured, and your plans for the immediate future
explains who you will sell your goods and services to and how you will find your customers
analyzes your competition and the competitive advantage your business has in the market
identifies your strengths, weaknesses and what it will take to be profitable

A business plan can help you strategize and chart your course. Business plans come in many shapes and sizes. You can find some great resources to help you get started online.

Understanding and Using Financial Statements for Your Business

Understanding, creating, and using financial statements can help you make informed and strategic decisions about how to run and grow your business.

Unfortunately, financial statements inspire fear and anxiety for some entrepreneurs.

Entrepreneurs typically have many skills, but finance and bookkeeping are not always among them. Most lenders, however, will want to see financial statements before making a loan. And basic financial statements are not just a hurdle to jump over to get a loan. They are tools to help you understand your business.

While you don’t need to become an accountant, increasing your comfort and understanding of basic financial statements can be very helpful. The three most important financial statements include:

Profit and Loss
Balance Sheet
Cash Flow

Taken together, these three interrelated financial statements can give you powerful insights into your business’ profitability, its financial condition, and expected cash flow.

Craft3 meets customers where they are

When a creative and talented chef contacted us about a loan to turn his side business into a fulltime venture, he has a solid business plan and delicious products. But up to this point he hadn’t done any formal bookkeeping.

We looked at his Square receipts and put together some financial projections before issuing a $45,000 loan. We’re often able to work with entrepreneurs who have strong businesses, but incomplete financials or unconventional bookkeeping.

Determine if a Loan Can Help Your Business Succeed

Whatever a loan enables should improve your business and increase your profits.

A loan might help you increase productivity, lower your costs, or grow your sales. If it doesn’t do one of those things, then debt likely isn’t the answer — at least not right now.

For example, if you’re thinking of using a loan to bail yourself out of a difficult situation, that’s a red flag. As is not having a clear sense of how a loan will enable your business to succeed.

Do you have a simple and persuasive explanation for how a loan will improve your business?

Yes. Congratulations! This is an all-important step in getting ready to apply for a loan.
No. We recommend you don’t apply for a loan right now and instead work on your business plan and determine how a loan fits into that plan.

Prepare to Discuss Your Business with a Lender

If you determine that your business would benefit from a loan and you’re ready to start reaching out to commercial lenders, it pays to be prepared to talk about your business.

Typically, you’ll talk to a commercial lender before submitting a full loan application. The lender will want to learn more about you, your business, and your financing needs.

Depending on what they learn, they may invite you to work with them and submit a full application. Or they may let you know why they don’t think you’re ready to apply quite yet.

If you are working with Craft3, whenever possible, we’ll connect you with resources so you can get loan ready or otherwise progress on your business journey.

Thinking Like a Lender: Insights for Your Loan Application

Understanding your audience is helpful regardless of the situation.

If you’re considering applying for a loan, insights into how a lender thinks can give you an advantage.

While lenders are not all the same, here are a few common concerns:

Lenders want to be repaid
Lenders are interested in how invested you are in your business
Lenders want to understand how your experiences, skills and temperament will help you succeed
Lenders want to understand credit challenges in context

Simplify Your Loan Application Process with these Document Tips

The final step in getting loan ready is often gathering the supporting documents a lender will ask for.

Here’s what Craft3 requires:

Signed application (NOTE: you can apply with an Individual Taxpayer Identification Number (ITIN))
Two years of business and personal tax returns
Personal Financial Statements from anyone who owns 20% or more of the business
Two years of financial statements (profit and loss and balance sheet) plus year-to-date financial statements

If your business is new (less than 24 months old), we also ask for:

Projections for the next 24 months
- NOTE: If your business is established and has a historic ability to service the debt you are requesting, we typically don’t require projections
Business Plan

Gathering these documents and statements will take time
Very likely more time than you imagined. We suggest you start before you apply and break the task down into parts so you’re not scrambling or spending a late night pulling everything together. Plus, it will serve you well to have this information readily available. Know that we are focused on simplifying the application process as we can and we aim to minimize the work required for you.

Get Ready to Apply for a Loan: Consider Your Next Steps

This resource is focused on what it takes to get ready to apply for a loan.

We hope the information, tips, links, and worksheets we’ve shared have helped you learn more about the loan application process and provided manageable steps for you to follow.

Now we suggest you take a step back and consider where you are. The graphic below shows the getting loan ready journey as a timeline. In practice, it’s often full of twists and turns, and the order of the steps can vary depending on your business and your situation.

As you consider the milestones and setbacks, ask yourself:

What steps have you completed?
What work remains?
What potential setbacks are you worried about?

Plan Your Next Steps to Get Loan Ready!

Much like launching a business, getting loan ready is a journey.

It takes time. You may experience setbacks. We urge you to stick with it!

To help you plan your next steps, you might consider your answers to the questions we asked you in the previous section.

What do you see as the two most important next steps for you in getting loan ready?

The two steps that you identified above can help you focus your efforts. In our experience, entrepreneurs are more likely to succeed when they:

break large tasks down into more manageable steps
have a plan
revisit their plan every few months

Tools and Resources to Help You Get Loan Ready

Thanks for spending time with this resource — and congratulations on taking a meaningful step toward strengthening your business.

This guide is just one piece of the support we offer small business owners. If you're looking for a deeper dive into preparing for financing, download our comprehensive Definitive Guide to Getting Loan Ready e-book in English or Spanish.

Start with the Basics

Get the resources you need to feel confident and prepared as you grow your business and explore financing options. Each download is designed to make complex concepts simpler and help you move forward with clarity.

Glossary of Finance and Business Terms Make sense of unfamiliar financial language. You don’t need to talk like a banker — but understanding their terms and mindset can help you communicate more effectively and make smarter decisions.
Unleash the Potential of Your Business with a Solid Plan A printable one-pager summarizing the key sections every strong business plan should include.
Understanding and Using Financial Statements for Your Business A quick-reference guide covering the essentials of income statements, balance sheets, and cash flow projections.
Determine if a Loan Can Help Your Business Succeed A printable worksheet to help you decide if financing is the right move for your business goals.
Prepare to Discuss Your Business with a Lender A practical worksheet featuring common lender questions, insights into what they’re really listening for, and space to organize your key talking points.
Thinking Like a Lender A printable guide to help you see your loan application from a lender’s perspective and prepare more strategically.
Simplify Your Loan Application Process with These Document Tips A checklist of the financial and business documents lenders typically require when applying for a loan.
Get Ready to Apply for a Loan: Consider Your Next Steps A reflective worksheet to help you assess your business’s current position and plan ahead for success.
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