Small Business Loans in Georgia: What You Need to Know

Gather all essential business formation documents including Articles of Incorporation/Organization, Operating Agreement, Bylaws, EIN documentation, and any amendments. Lenders need these to verify your business's legal existence and structure. Ensure all documents are current and properly executed.

Confirm your Georgia business license is current and in good standing. Georgia requires most businesses to have state licenses, and many counties/cities require additional local business licenses. Check with the Georgia Secretary of State and your local government to ensure all licenses are up-to-date before applying for a loan.

Compile comprehensive financial statements including balance sheets, income statements, and cash flow statements for at least the past 2-3 years. Georgia lenders typically require these to assess your business's financial health. For newer businesses, prepare year-to-date financials and financial projections.

Create a business plan that outlines your company's objectives, market analysis, competitive advantages, and how the loan funds will be used. While not legally required in Georgia, most lenders require this to evaluate loan risk and your business's growth potential.

Collect business tax returns for the past 2-3 years and personal tax returns if you're a sole proprietor or if personal guarantees will be required. Georgia lenders use these to verify income and assess tax compliance. Ensure you've filed all required Georgia state tax returns with the Georgia Department of Revenue.

Generate an up-to-date accounts receivable aging report that categorizes outstanding invoices by time periods (current, 30, 60, 90+ days). This helps lenders assess your cash flow and collection practices. Georgia lenders often use this to determine if receivables can serve as collateral.

Verify you have all required business insurance policies including general liability, property, workers' compensation (mandatory in Georgia for businesses with 3+ employees), and any industry-specific coverage. Lenders typically require proof of insurance before finalizing loans, especially for secured loans.

Carefully review the loan agreement which outlines all terms and conditions of the loan. Under Georgia law (O.C.G.A. § 7-4-2), verify the interest rate doesn't exceed the legal maximum (currently 16% for written contracts unless specific exceptions apply). Check for prepayment penalties, default provisions, and covenants that might restrict business operations.

Review and sign the promissory note, which is the legal document that contains your promise to repay the loan. In Georgia, promissory notes must include the principal amount, interest rate, repayment schedule, and maturity date to be enforceable. Ensure all terms match what was discussed with the lender.

Determine if a personal guarantee is required for your business loan. Most Georgia lenders require personal guarantees for small business loans, especially for newer businesses. This makes you personally liable for the debt if your business cannot repay. Consider consulting with a Georgia attorney before signing, as Georgia law provides specific rights and obligations for guarantors.

If offering collateral, carefully review the security agreement which gives the lender rights to specific business assets if you default. Under Georgia's version of the UCC (O.C.G.A. § 11-9-101 et seq.), the security agreement must reasonably identify the collateral and be authenticated by the debtor. Ensure the collateral description is accurate and that you understand which assets are being pledged.

For secured loans, the lender will file a UCC Financing Statement (UCC-1) with the Georgia Superior Court Clerk's Cooperative Authority to perfect their security interest. Verify the accuracy of all business information and collateral descriptions. In Georgia, these filings are valid for 5 years and must be continued if the loan term exceeds this period.

If borrowing from a non-traditional lender, verify they're properly licensed with the Georgia Department of Banking and Finance. Georgia law requires most non-bank lenders to be licensed. You can verify a lender's license status on the GDBF website. Unlicensed lenders may be subject to penalties, and loans from unlicensed lenders may have unenforceable terms.

Understand your rights under Georgia's Fair Business Practices Act (O.C.G.A. § 10-1-390 et seq.), which prohibits unfair or deceptive practices in business transactions, including lending. If you believe a lender has engaged in deceptive practices, you may file a complaint with the Georgia Department of Law's Consumer Protection Division.

Create a system to monitor ongoing compliance with loan covenants and payment obligations. Georgia law (O.C.G.A. § 11-9-601 et seq.) gives lenders specific rights upon default, including repossession of collateral. Set up calendar reminders for payment due dates and regular reviews of any financial covenants to avoid default.