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Get Your Personal Financial Papers in Order Before Talking to a Bank


You have your business plan prepared and you are ready to talk to a bank about your startup financing needs. But before you walk into the bank, you need to prepare some personal financial documents. Rest assured that the first questions the bank will ask will relate to these documents, so your preparation may be a key to your ability to get the financing you are requesting.

  1. Check Your Personal Credit
    First, check your credit rating and find out your credit score. The higher your credit score, the more favorably you will be regarded by the bank. To get your credit rating:
    • Go to one of the websites the offers free credit reports. A good one is www.annualcreditreport.com , which allows you to receive a free credit report each year. You can receive a report from each of the three top credit reporting agencies, Experian , TransUnion , or Equifax
    • Pay the extra money to receive your credit score, called a "FICO" score. The higher the FICO score, the better your credit rating.
    • Review your credit report to see if there are errors or old negative reports that can be removed to increase your credit rating. Then use the "dispute resolution" process of the reporting agency to get those negatives removed.
    • Take your credit report with you to the bank. This may save you from having the bank run a credit report on you.

  2. Prepare a Personal Financial Statement
    Your personal financial statement shows your assets (things of value that you own, like a house, car, stocks, or IRAs. It also shows the amounts you owe to others, including credit cards, student loans, mortgages, and car loans. You can use a simple personal financial statement or, better, use the personal financial statement (PDF) provided by the Small Business Administration (SBA).

  3. Prepare a Personal Budget
    Sit down and figure out what you need to live on while you are starting your business. The "bottom line" in this calculation is a monthly amount you will need to withdraw from your business in the form of salary (from your corporation) or draw (from a sole proprietorship). If you have other sources of income (from your spouse, for example), include this information. Include all of your financial obligations, like rent or mortgage payments and other bills you must pay. Be realistic about this budget; you may not be able to put a lot of money into savings in the beginning.

These three documents will be helpful to the bank as they review your financing request. More than that, they will be required for acceptance of your loan request.

Back to Preparing a Business Loan Proposal

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