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Business loan documents

The short version

  • The single most important paper is the personal guaranty — your personal promise to pay if the business can't. It reaches past your company and into your own pocket.
  • The loan agreement includes ongoing rules called covenants. Breaking one can put the loan in default even if you never miss a payment.
  • The security agreement pledges business property (equipment, inventory, money owed to you) as backup, and a public filing puts the lender first in line for it.
  • Several of these terms are negotiable — especially the guaranty's size, the covenants, and prepayment penalties.

The application and your financials

Tax returns, a profit-and-loss statement, a balance sheet, what you'll use the money for — and usually your personal finances too. Lenders want the whole picture.

The loan agreement and note

The core promise: amount, rate, schedule. Plus the covenants — rules you agree to live by while the loan is open, like sending financial statements or not taking on other debt without permission. Read the covenant list slowly. It's the part owners skip and regret.

The security agreement and UCC-1 filing

This pledges business property as collateral. The UCC-1 (a standard public filing under the Uniform Commercial Code) puts this lender first in line for that property. It also shows up when other lenders check on your business, so know what you've pledged.

The personal guaranty — read this one twice

Your company's legal shield (the LLC or corporation) normally protects your personal money. The guaranty hands that shield back for this loan. Things worth negotiating: whether the guaranty covers the whole loan or a capped amount, whether it shrinks as you pay the loan down, and whether a spouse must sign. If a lender wants your house as backup too, slow down and get advice.

Company papers

Your formation documents, plus a resolution showing the business approved the loan and who's allowed to sign it.

SBA loans add federal forms

If it's an SBA (Small Business Administration) loan, expect extra government forms and an SBA guaranty fee.

Before you borrow at all, free help exists: SCORE mentors and Small Business Development Centers will look at your plan for nothing. Compare business loan sources →
Sources to cite before publish: SBA (loan programs, forms, fees); UCC filing basics.