Getting ‘Credit Ready’: What It Means for You and How to Do It

It’s one of the most important things you’ll do as an entrepreneur: taking the steps to borrow capital that will help your business grow, thrive, or persevere through difficult circumstances. You likely already know why you need capital and how your business plans to spend it, but first, you need to successfully apply for funding. This article will serve as a guide to help you be prepared for that process.

Ensuring entrepreneurs like you are credit ready is important to us because, as a CDFI, our mission is focused on the overall financial and long-term success potential of the entrepreneurs with whom we work; whenever we are providing lending capital, our application and underwriting process reflects this objective. We will ask you, the small business borrower, to provide a series of documents that help us to understand the nature and context of your business, as well as to identify where you may need technical assistance that we can provide as part of the application process and ongoing support.

In general, our goal is to ensure our borrowers are “credit ready” as they receive their capital, and where that is not yet the case, we aim to work with you to get you prepared for the capital needed to operate and grow your business.

We encourage you to get your application materials prepared so you’re ready to submit as complete an application as possible before the process has even begun (which will help move the review and underwriting process along). In practice, this preparation is a matter of staying organized.

Whether you’re applying for a loan through NCRC CDF or another financial institution, here are some items you’ll want to have collected and ready to upload in order to move through your application and underwriting process quickly:

    1. Government Issued ID | Have a digital copy of the front and back of your driver’s license (a valid U.S. passport is also acceptable).
    2. Utility Bill | Have a utility bill that matches the home address on your government-issued ID.
    3. Business Debt Worksheet | You will need to reflect the schedule of debt associated with your business, which is most easily done in a document formatted like this downloadable template [link to download Excel sheet].
    4. Management Bio(s) | This would be a free-form document you prepare containing background and context for the ownership and management of your enterprise. It should encompass each individual owner and include details of each owner’s business expertise as it pertains to your specific enterprise.
    5. Tax Filings | You’ll need to have personal and business taxes for the past three years (2020, 2019, 2018) on hand. It’s important to provide all pages of each set of documents, including blank pages. All owners with an ownership stake of 20% or more in the company are required to provide these tax returns.
    6. Financial Statements | These statements include cash flow projections, profit & loss statements, and balance sheets for the same three tax years (2020, 2019, 2018). You’ll also need to have interim business financials prepared through 6/30/2021.
      1. Here is a template you can use for your cash flow projection.
      2. Here is a template for income statements (profit & loss).
      3. And here is a template for your balance sheet.
    7. Bank Statements | You’ll also need to provide three months of personal and business bank statements. Note that this should include:
      1. All copies – of the front and back – of each document, for all three months.
      2. Each of the owners with an ownership stake of 20% or more in the company must provide three months of bank statements.
    8. Incorporation Documents | Have on hand the incorporation documents you completed when you established your business entity.
    9. Business Plan | And finally, be prepared to share your existing business plan document (if you’re a start-up business, the business plan will need to include revenue projections). If this is your first time creating a business plan, here are some helpful templates.

There’s no substitute for good preparation. Once you have your information organized in these documents, you’ll indeed be “credit ready” and poised to forge ahead on your entrepreneurial journey.

Still, have questions? Do not hesitate to reach out to a member of our lending team, via [email protected].