How Lenders Examine a Small Business Loan Application

A lender looking at a small business loan application wants to see a business that offers the least amount of risk and the best chance of repaying the loan. When looking at a small business loan application, a lender will evaluate how the business is doing, business goals and ability to repay the loan. 

Business Performance

A lender considering a small business loan application will take a close look at how the business is performing, including how long the business has been around, and how profitable the business is. In order to evaluate a small business loan application, the lender will want proof that the business is bringing in enough money to repay the loan, including:

  • gross annual sales

  • balance sheets

  • cash flow statements

Business Goals 

For new businesses or ones wishing to expand, the lender will want to take a look at the business plan as part of the small business loan application. The lender will also evaluate:

  • cash flow projections for 24 months

  • current debts

  • payment schedules

  • available collateral

People Involved

Personal finances of the principals will be up for inspection during the evaluation of a small business loan application. This can include:

  • credit history

  • tax returns

  • current debt

Plan to Repay

Lenders will also want to see how the money from the loans will be used and the plan to repay the loan as part of the application for a small business loan.