Secret #2 for getting a business loan approval (don't tell anyone)

Be up front! This step goes hand-in-hand with secret #1; don’t narrow the information you provide to just what is asked of you—cover your bases. Include your personal financial information, future growth plans, etc. These are things a lender might or might not ask for, but delivering it anyway shows you are confident in your background. This can help minimize time spent collecting and delivering the requested information and make the lender’s job even easier.

Underwriters go through a comprehensive evaluation of each business that applies for a line of credit. They make sure to follow the 5 Cs of Credit Analysis whenever reviewing an application among other criteria. These include character, capacity, capital, collateral, and conditions. It’s important to understand what each of the C’s mean and to be prepared to provide any necessary information related to each.

Character: Your business experience, credit history, online presence, and customer reviews are all evaluated in this step of the process. Underwriters want to get a sense of your trustworthiness and stability as a business owner.

Capacity: Does your annual gross revenue allow for a comfortable repayment of any draw you could make based upon your credit limit? The accuracy of your growth and projection figures relative to what revenue has been in the past is reviewed as well. Additionally if your business has experienced any decrease in year-over-year revenue, being prepared to explain the reasons behind the decline will speed up the processing of your application.

Capital: Underwriters want to ensure that your business is healthy and that you are invested in the overall performance of your business. If there are an abnormally high amount of transfers into and out of the main business account, applicants should be prepared to explain what those other accounts are and/or their method for how/where revenue is deposited for their business.

Collateral: Most of our programs do not require collateral as part of our loan application process, even though some other lenders might. But we often will require, as will many other lenders, a personal guarantee to secure the repayment of the loan.

Conditions: Your business will go through a thorough analysis of industry risks, the local market it operates in, and the intended use of funds. Seasonality is also factored in to assess the competitiveness of your business in the marketplace. If your business is seasonal in nature, it’s a good idea to provide 6 to 12 months of bank statements up front to account for any seasonality. Underwriters need these additional statements so they get a more accurate picture of monthly revenues.