The document outlines the key aspects that banks examine when assessing small business loan applications. Banks will analyze the business owner's personal financial situation and require collateral from the business. They will also assess the business's past financial performance through audited statements and financial projections, as well as any vendor agreements. The business plan, management team experience, industry market conditions, and planned use of funds are also important factors considered by lenders.

1. When Deciding
to Give a Business Loan
Things Banks Look for
Whether or Not

2. Lenders have stringent guidelines
that they follow when assessing
small business loan applications.

3. Many bankers are forced to turn down applications
that do not meet the standards set by the bank.
The following outlines the key aspects that are
examined in the financing process.

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5. Banks will analyze the
business owner’s current
financial situation including
net worth, details on assets,
and past credit history.
Personal Financial Information

6. Your business must pledge certain
assets to back up the loan to
minimize the risk to the bank. If you
fail to make proper payments on the
loan, the lender may seize these
assets.
Collateral

7. Bankers will assess the
past financial
performance of the
business. In order to do
so, they require past
audited financial
statements.
Financial Performance of the Business

8. Financial Projections
Your team must compile financial projections for
the business. Lenders will evaluate future cash
flows and your ability to pay back the loan over
the term.

9. If your business has
substantial accounts
receivable or accounts
payable with third-party
vendors, the lender will often
need those agreements to
assess the stability of these
vendors.
Vendor Agreements

10. Business Plan
Compiling a concise
business plan will allow
the bank to see key
accomplishments of the
business to date and a
roadmap for where the
business plans to go in
the future.

11. Management Team
Lenders like to see owners
and management team
members that have
experience in running their
own business and have a
past track record of paying
back business loans.

12. Market Conditions
Loan officers will analyze a
company’s industry and market. If
the business is entering into a
high-risk industry, the bank will
take that into account.

13. Personal Investment
in the Business
Most lenders require
business owners to invest a
certain amount of capital
into the company to make
sure they have ‘skin in the
game.’

14. Allocation of Funds
Lenders will require the
owner to disclose where the
funds from the loan will be
allocated towards. The use
of funds should be allotted
towards certain assets and
working capital allowing for
growth.

15. • Personal financial information
• Collateral
• Financial performance records
• Financial projections
• Vendor agreements
• Business Plan
• Management Team
• Market Conditions
• Personal Investment
• Allocation of Funds
In summary, these are the key things you
will need in order to secure a bank loan:

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