Bank statements contain a lot of useful information for lenders. Lenders want to see your bank statements to get an understanding of how your company manages its finances and see if you qualify for funding.
Lenders want to review a few months’ worth of your company’s financial information to see what your income, cash flow, and daily balance look like. Consider opening a bank account if you do not have one. Not many lenders will give you funding for a business loan if you do not have bank statements.
Documents Needed When Applying for a Loan
Regardless of the type of loan you are applying for, you will likely need to provide bank statements. Typically, you will be asked 3-6 months of bank statements. They will verify the bank statements you provide by contacting the bank directly or sending a verification or proof of deposit request to your bank and validate your history and account balance.
Lenders may also request the following documents in addition to the bank statements:
- Driver’s license
- Voided business check
- Proof of ownership
- Tax returns
Why Do Lenders Need to See Bank Statements?
Below are the top reasons why lenders check your bank statements.
Verify your business’s name: the information on your bank statements will help verify your business’s registered name and trading name.
Financial history: to assess your business’s health the bank statements are a good indicator to see how it is doing.
Average daily balance: if your bank statements show that you struggle to keep a positive daily balance, it will be difficult for you to be approved for a loan. If it is positive over a certain period of time, you are likely to get approved for funding.
Daily deposits: the more daily deposits you have, the better because it shows that you are bringing in revenue. If you have not received a deposit in weeks, your chances of getting approved are very low.
Recurring payments: your bank statements prove to the lender that your deposits or revenue are more than your payments or expenses. If your business is repaying pre-existing debt, your lender will want to know if you have any remaining balances on your company.
How To Find Your Bank Statements
- Log on to your account: visit your bank online and log on.
- Find your statements: you can find your statements on the home screen of the website. It should be labeled “documents” or “statements”.
- Download statements: you should be able to download your statements as PDF files.
The Bottom Line
Bank statements can tell the lenders how healthy and consistent your business is. To be considered for approval, lenders look for those who make enough to operate while paying expenses, employees, and debt. Lenders want to make sure that your business is sustainable before they lend you money for your business.