Business Loan Applications: What Lenders Really Want

According to the Federal Reserve’s most recent Small Business Credit Survey, demand for small business financing has stabilized at prepandemic levels, with 37% of small employer firms applying for a loan, line of credit, or merchant cash advance. At the same time, approval rates remain stubbornly below where they were before the pandemic — with fewer than half of applicants at large banks receiving full approval.

In this environment, knowing exactly what lenders need from your application isn’t just helpful—it can make or break your ability to move your project forward. So, what does it take to successfully apply for – and secure – the right capital for your business?

The truth is, when it comes to applying for a business loan, the paperwork lenders ask for can seem daunting. This is especially true if you are going through the application process alone while juggling your day-to-day business operations.

The good news? It doesn’t have to be that way. While there are several advantages to working with a commercial mortgage broker, a key benefit is making the business loan application process a streamlined, smooth experience. Mortgage brokers ensure your business loan application receives a timely review by helping you submit necessary documents to lenders and, in many cases, can do so on your behalf.

Today we share the most commonly requested documents you should have ready for lenders – and us – when applying for a business loan.

Business Loan Application Basics

First and foremost, you need to be able to answer the following questions from lenders:

1. What size loan do I need?
2. How will I use this loan in my business?
3. What are my ideal loan terms (interest rate, term, non-recourse, etc.)?
4. How quickly do I need these funds?
5. If necessary, how much equity am I prepared to bring to the table?

Whether you work with a commercial mortgage broker or take on the time-consuming business loan application process yourself, these questions are some of the first you’ll need to have answered. 

Financial Information

For a lender to determine if they can fund your loan request, it is critical to have your personal and business financials ready. Lenders need to review some documents upfront, while others aren’t necessary until later in the underwriting process. Since every lender’s document requirements are different, this is another example of the value a mortgage broker brings when your project is being considered by multiple lenders.

Lenders most commonly ask for these financial documents on your business loan application:

1. Pro Forma
2. Up-to-date Rent Roll
3. Personal Financial Statement – SBA has a great template here
4. Up-to-date P&L Statement
5. Your Credit Score
6. Business Plan (if readily available)

This is, of course, not a comprehensive list, and not all of these documents may be applicable to your loan request. Many non-bank and direct lenders highlight their minimal documentation requirements to encourage you to apply. While a low-documentation loan may be the right fit for your project, just be prepared for potentially higher fees and interest rates.

If you need help choosing the right type of loan for your project, fill out our quick questionnaire and we will steer you in the right direction.

Your Story

While numbers are a critical part of business loan applications, they aren’t the only thing lenders and investors review. It’s important to remember that lenders want to know YOU as the borrower and guarantor. Simply put, they need to determine if you have the skills, resources, and experience necessary to be successful (read: pay back your loan).

To showcase your projects in the best possible light with lenders, be sure to touch on the following points in your business loan applications:

1. What is your vision and overall plan for this project/venture?
2. How did the idea for this project come to fruition? Why did you become involved?
3. Share similar projects and/or businesses you’ve worked on, as well as your overall industry experience
4. Highlight successful past projects, including their sizes and locations
5. Share relevant education and skills showing you are qualified to take on this project – and be successful

If you are lacking a long list of past ventures or commercial real estate successes, don’t be discouraged! In addition to your experience, showcasing your commitment to and passion for your project can go a long way. Don’t assume you need to write a lengthy autobiography, either; keep your loan application bio between 2-3 brief paragraphs.

Check out our recently closed deals to see just how unique – and powerful – each borrower’s story really is.

The Bottom Line on Business Loan Applications

As you can see, there are many components to submitting business loan applications. The documents covered in this article will help you gain traction with potential lenders.

While this is a great place to start, we strongly recommend working with a commercial mortgage broker to give your project an edge and successfully secure the financing you need for your business. Submit your loan scenario and start getting matched with lenders today!

What other must-have documents would you include on this list?

BONUS: Click here to download your FREE copy of our Ultimate Commercial Loan Checklist. Don’t be caught without these must-have items!

Dixon Link Capital is a commercial mortgage brokerage and capital advisory firm specializing in commercial real estate.