What Lenders Look for in a Small Business Loan

If you’re looking for a small business loan, you need to understand the process for reviewing the loan and the kinds of information your lender will be seeking when computing your risk profile. The risk profile is what loans come down to, and showing your company is stable and financially healthy is the key to assuring a lender that you are a good risk for a loan. SBA loans are easier to access as a small business, but they operate on the same principle, and you need many of the same key components in an application package.


The core of your application will be your business plan. Lenders look for a plan to be clear on the company’s operations and finances, but they also want to know about your overall strategy for success. That’s why it is important to put in the details when writing each section of the plan, from the executive summary through to the financial projections based on your current operational capacity and the opportunities for growth available with the loan.


On top of your business plan, you’ll need to complete an application packet for SBA loans. Those packets tend to differ slightly from institution to institution, but they have several core components in common, because they all need to gather the information the Small Business Administration requires when making loan determinations. That includes the financial documents substantiating your claims in the business plan and demonstrating the size of your current reserve funds, a credit report, and other key pieces of financial data.


Small Business Administration loan packages also require you to include information about how your small business will be able to contribute positively to the local economy. That can be shown in a few ways, but one of the fastest is to establish that it will add jobs to the local economy. You can also include information about how your increased demand on local vendors will help stimulate their hiring activity if you can show a strong enough impact on your vendors’ activity from your growth.


The last thing lenders look for when approving SBA loans? Your overall conduct as the entrepreneur in question. Be ready to make presentations and answer follow-up questions about the content of your business plan and you will show any lender how your company is prepared to move into the future with the help of a small business loan. It’s just a matter of having the right information to show.

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