What collateral is used to secure loans and lines of credit?
Generally, business loans may be secured by the business’s assets, including equipment or contracts negotiated in advance of the loan application. What documents to banks require of commercial loan applicants? Lenders will ask applicants for a resume to evaluate the borrower’s experience in the business they want to finance. For example, if a person is seeking financing for a restaurant, the bank wants to know if the borrower has extensive restaurant experience. Borrowers should also bring a business plan that details their business operation, target market, and profit and loss projections. Lenders also request a copy of the borrower’s personal income tax filings for the previous three years. If a loan or line of credit is intended to fulfill contracts already negotiated, the lender will probably ask to review the three previous years’ business tax returns for the company representing the contracts. Should commercial borrowers shop for loans? They should shop for interest rates, terms
