What Do Banks Look For in Business Loan Applications?
Banks evaluate business loan applications based on the "5 C's of Credit": Character (credit history), Capacity (ability to repay), Capital (owner investment), Collateral (assets to secure loan), and Conditions (loan purpose and market conditions).
Key Insight: Documents Prove the 5 C's
Every document you submit helps prove one or more of the 5 C's. A Personal Financial Statement shows your personal capital and collateral. An Income Statement demonstrates your capacity to repay. Your Debt Schedule reveals existing obligations that affect capacity.
Financial Documents You Can Create with BankReadyDocs
Personal Financial Statement
Lists your assets, liabilities & net worth. Required for all owners with 20%+ stake.
Create Now →Balance Sheet
Snapshot of business assets, liabilities & equity at a point in time.
Create Now →Income Statement (P&L)
Shows revenue, expenses & profit over a period. Proves ability to repay.
Create Now →Debt Schedule
Detailed list of all existing debts with balances, rates & payments.
Create Now →Document Requirements by Loan Type
Term Loan Documents
Most CommonRequired Documents
- Personal Financial Statement
- Balance Sheet
- Income Statement (2-3 years)
- Debt Schedule
- Business Tax Returns (2-3 years)
- Personal Tax Returns (2-3 years)
Also Commonly Required
- Bank Statements (3-6 months)
- Business Plan or Use of Funds
- Articles of Incorporation
- Business Licenses
SBA Loan Documents
Most ComprehensiveSBA loans require the most documentation. See our complete SBA 7(a) checklist →
Required Financial Documents
SBA-Specific Forms
- SBA Form 1919 (Borrower Information)
- Business Tax Returns (3 years)
- Personal Tax Returns (3 years)
- Business Plan
Equipment Financing Documents
Fastest ApprovalEquipment financing is often faster because the equipment itself serves as collateral.
- Personal Financial Statement - Shows personal guarantee ability
- Equipment Quote or Invoice
- Bank Statements (3 months)
- Business Tax Returns (1-2 years)
Tips for a Successful Loan Application
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Numbers Must Match
Your Personal Financial Statement totals should match your Debt Schedule. Inconsistencies raise red flags.
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Use Current Data
Financial statements should be dated within 90 days of your application. Banks want to see your current position.
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Professional Formatting
Handwritten or poorly formatted documents make a bad impression. Use BankReadyDocs to create professional PDFs.
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Include All Owners
Every owner with 20%+ stake needs their own Personal Financial Statement.