Properly preparing for a commercial loan is critical to your chances of obtaining approval. After you leave the bank your application will undergo a complete review that will consider both your personal and business credit worthiness. Your personal credit reports and FICO score will be pulled along with business information from Duns and Bradstreet as well as the completeness of your application and business financials.
Before submitting any loan application check your personal credit reports at www.annualcreditreport.com . A FICO of 650 is usually the minimum necessary if the remainder of the application shows a healthy business performance, a score above 675 will certainly improve your chances and may be required in some situations.
Verify business information at Dun and Bradstreet, also known for issuing your business a DUNS number. Dun and Bradstreet track every business's credit performance and are the data resource used by SBA when reviewing loan guarantee applications. In particular SBA will check your contact information, length of time as current owner, trade lines payment history, and if any legal actions may be in your history.
Should a blemish exists on either personal or business records you have the opportunity in your loan application package to offer the lender an explanation. Lenders do not like to be surprised, and might think you are trying to hide information that could negatively affect you application. You will be much better served if you discuss past situations upfront where the lender can advise as to how serious the blemish will be and what corrective actions would mitigate the problem. Additionally, you might be able to take actions to improve your total FICO score and Dun and Bradstreet report before submitting for a loan.
Application review will look very closely at your personal and business financial situation. Use SBA's Personal Financial Statement to help prepare your financial status. Provide Income tax and financial statements to demonstrate business history and trends. A variety of business financial ratios will be calculated to confirm your ability to pay all bills on time including the loan payments and to compare with peer business performance, consider this your business league win loss record.
Keep in mind that as the lender completes underwriting often the only data they have is what you provided in writing. Each time there is a missing bit of information the review stops until you provide more information, or the lender decides to deny the application.
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