What Do I Need to Prepare Before Applying for a Commercial Loan?

For some people, applying for commercial financing is business as usual. However, for first-time applicants, it can seem like a daunting undertaking. What does it take? Do you need to put on a coat and tie and go to the bank? Do you need to knock the dust off the last several years of tax returns? These are all valid questions, and they can create some anxiety about applying for financing.

At Team Financial Group, we make the application process easy and convenient for our customers. Keep reading to learn more about what you can expect from this process.

What You’ll Need for the One-Page Application

Your potential lender will evaluate your application based on a few factors that can typically be identified on a simple one-page application.

Your application will need to include:

• Your legal business name
  

  The lender will verify that the business name exists and is registered at the state or local level. Be prepared to identify the business type (such as an LLC, corporation, sole proprietorship, etc.) as well as your business’ employer identification number (EIN).

• Contact information

  You’ll need to identify the business address and mailing address for your company as well as the phone numbers of key contacts. This will help expedite the approval process.

• Personal information of the business owners

  In order for the lender to access your personal credit scores, be prepared to provide your name, home address, and Social Security number as well as a copy of your driver’s license.

• Description and cost of the equipment

  The best way to provide this information is with a specific quote from a vendor that details the equipment and purchase price. However, if you haven’t gotten that far yet, a brief description of the intended purchase will do. Other relevant information that may apply to your equipment purchase includes:

  • Make
  • Model
  • Age
  • Mileage
  • Hours

For larger loan applications, you should be ready to provide business financial statements or tax returns for at least the last two years. At Team Financial Group, we would start to require this information when the loan request or total exposure with a business reaches $100,000, but this requirement can vary depending on the size of the business.

Many businesses use an accounting system such as QuickBooks that can quickly provide an income statement and balance sheet. Other businesses may have CPA-prepared financing statements that can easily be forwarded on to your lender.

RELATED BLOG ARTICLE: How to Choose the Right Commercial Lender

How Will the Lender Use the Information I Provide?

All lenders are different, so we can’t speak to the processes of every lender. In general, the lender will use the information you give them to take a good look into the creditworthiness of your business. To determine how much risk is involved in lending to your business, the lender may take the following steps:

1. With the business name and address provided, the lender can access a business credit score through companies such as Dun & Bradstreet. These agencies gather public information about all businesses, which may include any ongoing legal action as well as liens and Uniform Commercial Code (UCC) filings on the business.
2. Your contact information allows an open line of communication between you and the lender. At Team Financial Group, we pride ourselves on being completely clear and open in an industry that’s often marked by a lack of transparency.
3. The lender will use your personal credit report to look at how you manage your other debt. This is very useful information since there is a high correlation between the credit score of a business owner and the creditworthiness of the business itself.
4. The lender will draw from the equipment description to dictate the credit decision and the terms of the loan. For instance, some lenders may be happy to finance new equipment for a 60-month term but may only finance used equipment for 36 months. Also, some lenders may require a down payment on used equipment but not new.

Choose Team Financial Group for Your Commercial Equipment Financing Needs

At Team Financial Group, we take a personal approach to every financing request. Our experts can help you get organized and gather the information to secure the financing you need.

If you have any questions about our financing approval process or which financing option is right for your business, fill out our online contact form or give us a call at 616-735-2393. We’re here to help.

The content provided here is for informational purposes only. For financial advice, please contact our commercial financing experts.