Business Loans:
What Lenders

How to Strengthen Your Application

A lender's job is to critically evaluate your business loan application. Your job is to present the lender with the facts supported by a solid plan to lower the amount of risk associated with your loan. What do lenders look for?

Let's examine some of the most critical aspects of applying for a loan and why they're considered the top 5 most important things they consider.

1. A Sound Business Plan

A solid business plan is critical to justifying that you have a viable, profitable business venture. The lender wants to see a strong indication that the loan is worth the risk. Develop a narrative that describes what you intend to do with the business and how you will use the loan funds. Include the demographics about your customer base and how it will grow or change; explain the importance of your location; describe the roles of partners or employees, etc.

Construct a realistic 12-month cash flow projection, a projected profit and loss statement (P&L) and projected balance sheet of assets, liabilities, and owner's equity. If you are purchasing an existing business, obtain the past records and indicate intended changes or improvements in business financials and operations.

The most important consideration when creating your business plan is to be realistic. Temper your optimism and excitement and keep your expectations sensible and businesslike.

2. Investing Your Own Money

Your willingness to invest your own funds is an important aspect of evaluating the loan application. This indicates you are committed to the business. Do not expect the lender to fund 100% of the loan. Further, if you expect to receive gifted funds, be sure to include them in the cash flow projections.

3. Being Conservative in Your Personal Finances

Demonstrate that you have a history of well-disciplined spending and saving habits. Your personal experiences are a direct reflection of how you may handle yourself in future business transactions and operations. Postpone or avoid major purchases during the loan approval process so your debt to asset ratio remains stable.

4. The Contents of Your Credit Report

Your credit report establishes credibility and long-term responsibility with not only your personal finances but also with any previous business ventures. Your goal is to establish that you have a positive track record. Correct any errors before working with the lender to avoid questions or concerns.

5. Banking Local

Banks typically have a desire to lend to individuals within their own community. They have a vested interest not only in you, but in protecting the bank's local depositors and supporting the area's economy. By knowing you personally and professionally, your credibility will help increase the lender's confidence in your ability to repay the loan.

Have a Business Idea? Get Started Today!

Contact Payne County Bank's commercial lending team. We're here to help you be successful. Call 547-2436 and ask for Lynn or Gene or email us at

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