The goal for any underwriter is to determine whether your business can service the debt that you are looking to take on. They will likely start that review by looking at key information about you and your business, including:
- Credit scores.
- Prior bankruptcies.
- Delinquent payments on past debts.
- Your financial standing and capabilities, including any savings.
- Potential collateral, if the loan needs to be secured.
For more complex loans, they may ask for more detailed reports and documentation about your business, including:
- Cash flow.
- Historical tax returns.
- Revenue reports.
- Day-to-day expenses.
The lender will assess the financial status of your business, which can take time, so build the underwriting process into your timetable.
SBA approvals may take a bit longer
For loans that have a guaranty from the U.S. Small Business Association, or SBA, there will be additional steps. After credit approval is received from underwriting, you will need to fulfill the SBA’s loan application requirements.
At high-touch institutions, such as M&T bank, a specialist in SBA lending will provide you with the SBA requirements needed to complete the process.
When it’s time to sign
What happens when it’s time to sign a loan agreement? The financial industry is working toward an all-digital future, but it’s not there yet. Some documents still require a signature on paper, but some do allow e-signatures, like DocuSign.
What happens if my loan application isn’t accepted?
Work with your lending institution ahead of time to avoid this, as they may be able to make your business more marketable to the underwriters before you complete your application.
- If you have credit issues: Work to improve your score and make yourself more creditworthy before reapplying.
- If you lack collateral: Could you secure additional funding or investors to help? Outside parties can help with a down payment for a loan or by investing equity directly into your company.
- If you asked for a high sum: Consider a lower loan amount. What goals or needs could you delay until your business is more established or successful?
Consider a high-touch model
Working with a lending institution that offers a higher-touch model with relationship managers can smooth the loan application process. Especially if the institution already understands your industry, your business and your history.
Ready to get started?
Thanks for reading our guide on small-business lending. We hope that the information has made you more comfortable with the lending options that are available to your business and the process for applying. We look forward to hearing from you and discussing how M&T Bank can build a lending solution that will fit with the needs of your business.