Summary: Just as a business plan is crucial to starting or growing your business, a business loan application checklist is vital for a smoother application process with your lender. Taking the time to learn what lenders are looking for and why will help to demystify the business loan application and process. As you read on, you’ll see the better prepared you are for the loan process, the less scary it is.

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Many business owners aren’t aware of the different types of information that may be required to submit to a lender when applying for a small business loan. Pursuit has made this piece of the small business funding puzzle easier by creating this business loan application checklist for you.

Complete applications that include all of the required documents are much easier for lenders to process, which means that you’ll get a decision faster. On the other hand, missing documents can lead to processing and approval delays (and, in some cases, even rejection) because the lender has an incomplete or inaccurate picture of the applicant. For transactions involving real estate, this can lead to forfeited contract deposits, expensive project delays, or the need to put closings on hold.

It’s better to take the time to prepare your application for submission before you approach lenders. When you gather and organize these documents ahead of time, you’ll:

• Speed up the application, review and decision processes;
• Reduce delays;
• Reduce the stress that many business owners feel about the loan process; and
• Demonstrate to lenders that you take this seriously, which reflects well on you and your business.

What documents are required for most small business loans?

Most lender will require the following documents for small business loans. If a lender doesn’t request at least some of these documents, it could be a “red flag” that you’re dealing with a predatory lender.

• Your most recent three years of personal and business federal tax returns with all tax schedules. If your business has been in operation for less than three years, include tax returns for the most recent years available. Be sure to include all schedules with the tax forms, so that lenders can perform the full analysis needed.
• An interim business financial statement that includes an income statement and balance sheet, dated within 90 days of the application date.
• Bank statements for the most recently completed three-month period (these may be required for personal and business accounts).
• A current business debt schedule listing all your term loans, lines of credit and credit cards. The debt listed on the schedule should match the liabilities that are reported on your interim balance sheet.
• A current personal financial statement reflecting all personal assets (be sure to include both jointly and individually owned assets) and all personal liabilities.
• A business plan (especially for start-up businesses and those in the early stage of operation) that provides detailed revenue and expense projections with assumptions. The information should be presented monthly and cover a 24-month period.

If you’re applying for a commercial mortgage or SBA 504 loan, there are additional documents that you’ll likely need to submit. These may include signed purchase contracts for the acquisition of the property, inspection reports, proof of insurance (or insurability) and others.

Three important points to know before you apply

As you’re preparing for the application process, addressing these three points before you apply can make the process easier for you:

• Know your personal and business credit situations before you apply. If there are negatives in your credit history, such as late payments or past bankruptcies, be prepared to provide written explanations. Be ready to discuss of the circumstances that caused them and how you’ve overcome them. You should include proof such as confirmation from creditors that your accounts are paid.
• Be prepared to discuss your financing needs, specifically identifying the sources and use of funds. Write this into the executive summary of your business plan as well as the financials.
• Allocate a reasonable amount of time for the application and credit review process. While some loans can be reviewed and approved quickly (such as a Pursuit SmartLoan, which can be approved in a few days with a complete application), many others may take several weeks. Real estate transactions typically need 60 to 90 days, at a minimum.

Three questions to ask your lender

You’ll have many questions when you first meet with a small business lender. Here are a few common questions the Pursuit team has received from potential borrowers:

Q: How long is the loan application and approval process?

A: The timing generally depends on the complexity of the loan request and applicant preparation. Some loans can close within days or weeks of the submission of a complete application. However, real estate transactions generally take 60 to 90 days and sometimes longer if construction is involved.

Q: How much can my business borrow?

A: Lenders can provide a more accurate response when you provide the complete loan package, including the documents requested. Make sure you come to the meeting prepared with a loan amount in mind based on projected costs. Your lender will want to see that you’ve done your research ahead of time and have a plan for every dollar.

Q: I don’t prepare interim financial statements for my business, and I rely on my tax preparer. What should I do?

A: Pursuit has helpful information to create your interim financial statement, or you can find free templates online. You can also contact your tax preparer, who may be able to help you for a low fee or even at no charge.

Preparation is key and Pursuit can help

The better prepared you are for the loan process, the easier it will be when you apply, so use our business loan application checklist to help you get organized. And when you’re ready to apply or even if you simply want to explore your options, contact us today.

Pursuit has an experienced team of business advisors with access to more than 15 loan options for small businesses, and we’re ready to help you strengthen and grow your business.