What Will You Need to Do After You Enter Into Your Small Business Loan?
The process of obtaining quick business loans is often so arduous that many businesses and their management experience a feeling of deliverance once the loan is received. However, receiving money from a bank is not the end of your requirements to them. You will need to deliver a host of data and information including compliance certificates, covenant calculations, and other financial reporting documents.
Depending on the nature of your agreement you may need to submit audited financial statements. To do so you will need to contract with a Certified Public Accounting (CPA) firm that is reputable and accepted by the lender. Be aware of the reporting deadlines that the lender has and what repercussions will be present if you can’t meet this deadline. Many lenders will offer you a waiver of the covenant for submitting financial statements if an unknown delay occurs while others will charge a fee when this occurs. Each bank relationship is different and unique and requires specific care when not only entering into the agreement but also in adhering to the terms of the agreement itself.
Most loans to small businesses have loan covenants that the company will have to abide by. Some are soft in nature such as not borrowing money from other lenders without approval first and others are hard calculations such as meeting some debt to equity ratios. Businesses will need to review these calculations and make sure that they adhere to the stipulations of the agreement. This requires constant monitoring and adherence and maintaining a budget can help to ensure compliance with the loan covenant terms.