Submitting a Business Loan Application: Increasing Your Chances of Approval

Before you submit your business loan application, take some time to learn how you can increase the likelihood you'll be approved by your commercial loan lender. Hint: Your business loan, loan proposal and business plan are all important pieces of the equation.  

Ensure Your Credit Rating is Excellent

A commercial loan lender will carefully review your credit history and overall credit score. Keep in mind that any request for your credit automatically drops your credit score down a notch, so don't have numerous credit checks in the months before you want to apply for a business loan. If you have items in your credit history such as late payments or errors, clean them up well in advance of submitting your loan proposal. Allow 6 to 18 months to bring your credit score and history up to par with the lender's requirements. If you and a partner are applying in a joint application, make sure your partner's credit is equally excellent. If not, your loan proposal may not be approved.

Research Your Lenders

Before you invest your time and energy into preparing the necessary documents and going through the whole loan approval process, do sufficient research to ensure that you're applying at the kind of lender who'll be more favorable to your business loan application. Consider applying at small local banks in your neighborhood, or where you've already established relationships with the lender.

Prepare a Strong Business Plan

Since your business plan is the document your lender will likely review first - to see whether or not your business loan application is worth looking at - make sure your executive summary puts forth in detail the key points about your business. You may prepare your business plan yourself or ask a professional, perhaps your CPA. No matter who prepares it, some questions your business plan should answer for the lender include:

  • How much money are you asking for?
  • What will you do with the money?
  • When will you be able to repay the loan?

Other parts of the business plan cover general information, market information and financials.

Meet All the Lender's Requirements

Thoroughly review the requirements of the lender before you complete your business loan application. There may be income requirements before they'll issue you the business loan. If you don't make the income they require, you'll be turned down. Prepare all the documentation, exactly as the lender requires. Ensure that you have all the proper back-up information as well, copies of personal and business tax returns, etc. Not supplying everything the lender asks for delays your loan processing. It can even put it in jeopardy.

Organize Everything

Submit all your documents, business loan application and business plan in a well-organized manner. You want to impress the commercial loan lender with your professionalism, attention to detail, and the character attributes that convince the lender you're a good risk.

Appear Relaxed and Confident

During your meeting with the lender to review your business loan application, be relaxed and confident - but not overeager or desperate. Beyond the strength of your documentation, credit and all the other parameters, the lender looks at the individual business owner. This is who they'll be lending money to. This is the final test. Be sure you do all you can to exceed their expectations - and obtain approval for your business loan.