Typical Small Business Loan Application Process
Depending on the amount of money that you’re requesting and exactly what type of business funding you are applying for, the application process is often very similar regardless of what bank you are working with. You’ll submit an application that provides some details about you and your business, as well as information about the amount of money that you’re looking for. Along with the application, you’ll submit certain preliminary documents, which will vary depending on what bank you’re working with. This will go to an underwriter, who will go through and make a pre-approval based on this information.
Once you decide that you want to move forward with the loan based on the pre-approvals, you’ll probably have to submit some closing documentation, and the the underwriters start on their due diligence. Many times, part of the due diligence that is done involves calling certain references. They’ll probably ask you to provide references for small business loans and other types of business funding. The references for small business loans can include trade references and often they’ll get a reference from your landlord or from the bank that holds the mortgage on your property (depending on whether you rent or own the location that you work from).
References for Small Business Loans
Getting these references for small business loans offers underwriters some important insight as to the health of your business that can’t be assessed based on any paperwork that you could probably supply. Your payment history with your vendors, and more importantly, your landlord, will be a strong indication of not only your ability to manage your business cash-flow, but also the likeliness that you’ll be able to make timely payments on your loan. In extreme circumstances, it can even provide more information than that. For example, if you get a negative reference from your landlord, it may be an indication to an underwriter that you’re having more serious problems and are at risk of going out of business.
References for small business loans are important. More important is the underlying factor, which is making timely payments to your vendors. When it comes to qualifying for a small business loan or other type of business funding, your payment history with the people you do business with regularly can weigh in heavily on an underwriter’s decision to approve your application.