Money Smarts Blog

Remember the old days when a firm handshake was all it took to get financing? Yeah, those days are long gone. Today’s banking world is a bit more detailed and that means more paperwork. But don’t worry! Knowing what you need upfront can make the process smoother and show your Commercial Loan Officer you mean business.

Every loan request is unique, but here’s a solid starter pack of documents you’ll typically need to kick off the underwriting process:

1. Last three years of personal and business tax returns

Tax returns help us see your cash flow and calculate key financial ratios like liquidity and leverage. One common hiccup? Sometimes businesses focus so hard on minimizing taxes that their net income looks too low to cover the loan payments. The fix? Chat with your accountant ahead of time so your tax strategy aligns with your borrowing goals.

2. Personal financial statement (PFS)

Your PFS lays out your personal assets, debts, and net worth. It helps us get a full picture of you as the borrower and can open up other financing options you might not have considered.

3. Business debt schedule

Your business balance sheet shows total debt but usually doesn’t break down monthly payments. A business debt schedule fills in those blanks, allowing us to do a precise cash flow analysis.

What else might you need?

• Business plan: Starting fresh? You’ll want a detailed plan that covers how your business will run, who’s involved, and the financial forecast for the first 3-5 years. Since you won’t have historical financials, projections are key.
• Rent roll: Buying a multi-unit property? We’ll want a rent roll listing tenants, rents, and lease terms – both current and projected.
• Interim financials: If your latest tax return isn’t ready yet, provide recent balance sheets and income statements so we can see how things are going so far this year.
• Purchase agreement: Whether it’s real estate or equipment, this document shows what you’re buying and the agreed price, proving the purpose of the loan funds.

Once your loan is approved, the paperwork marathon winds down. But there are a few last steps. You’ll provide business formation documents like your Articles of Incorporation, Corporate Bylaws, and IRS tax ID letter to wrap things up.

Why all the paperwork?

As loan officers, we get it. This can feel like a lot. But with today’s regulations, we need to prove we’re lending responsibly. These documents protect both you and the credit union, ensuring you get the right loan for your business.

You don’t have to be a paperwork pro, but having this checklist handy will keep you one step ahead when it’s time to apply. Ready to get started? I’m here to help!

Remember the old days when a firm handshake was all it took to get financing? Yeah, those days are long gone. Today’s banking world is a bit more detailed and that means more paperwork. But don’t worry! Knowing what you need upfront can make the process smoother and show your Commercial Loan Officer you mean business.

Every loan request is unique, but here’s a solid starter pack of documents you’ll typically need to kick off the underwriting process:

1. Last three years of personal and business tax returns

Tax returns help us see your cash flow and calculate key financial ratios like liquidity and leverage. One common hiccup? Sometimes businesses focus so hard on minimizing taxes that their net income looks too low to cover the loan payments. The fix? Chat with your accountant ahead of time so your tax strategy aligns with your borrowing goals.

2. Personal financial statement (PFS)

Your PFS lays out your personal assets, debts, and net worth. It helps us get a full picture of you as the borrower and can open up other financing options you might not have considered.

3. Business debt schedule

Your business balance sheet shows total debt but usually doesn’t break down monthly payments. A business debt schedule fills in those blanks, allowing us to do a precise cash flow analysis.

What else might you need?

• Business plan: Starting fresh? You’ll want a detailed plan that covers how your business will run, who’s involved, and the financial forecast for the first 3-5 years. Since you won’t have historical financials, projections are key.
• Rent roll: Buying a multi-unit property? We’ll want a rent roll listing tenants, rents, and lease terms – both current and projected.
• Interim financials: If your latest tax return isn’t ready yet, provide recent balance sheets and income statements so we can see how things are going so far this year.
• Purchase agreement: Whether it’s real estate or equipment, this document shows what you’re buying and the agreed price, proving the purpose of the loan funds.

Once your loan is approved, the paperwork marathon winds down. But there are a few last steps. You’ll provide business formation documents like your Articles of Incorporation, Corporate Bylaws, and IRS tax ID letter to wrap things up.

Why all the paperwork?

As loan officers, we get it. This can feel like a lot. But with today’s regulations, we need to prove we’re lending responsibly. These documents protect both you and the credit union, ensuring you get the right loan for your business.

You don’t have to be a paperwork pro, but having this checklist handy will keep you one step ahead when it’s time to apply. Ready to get started? I’m here to help!