Whether you go to your local bank, or choose an online option, you will be asked to provide various documents to get an approval.

Each lender has their own process, but you can expect to be asked for the following:

Personal Information

Your social security number will be required regardless of where you apply.  Lenders will look at your social security number for three reasons:

  • Verify identity
  • Credit score/profile
  • Criminal background

If you have a criminal background, have a tax lien, open bankruptcy, back child support, open legal cases or defaults, you can be declined for funding.

Many people have their credit scores locked or frozen, you will need to unlock your score to get offers, even for a soft pull.

Your personal credit score will be one of the first factors looked at when determining IF you qualify for funding.  Each lender has their minimum requirements, and if you DO NOT meet the minimum, it’s very unlikely you will be approved.

Without the required credit score, sometimes, depending on the situation, collateral may be used to turn a decline into an offer.

Banks and credit unions by law MUST process your file regardless of if you meet the minimum requirements.  They will do a hard pull at the beginning, so keep that in mind.

Alternative lenders and online lenders typically offer a soft pull for offers but check with the company you are working with to ensure your credit isn’t being hit repeatedly.

Financials

Personal and/or business financials will be requested.

These requests can be as little as 3-6 months bank statements and a tax return, to merchant statements, profit & loss, balance sheets, asset sheets, debt schedules, Accounts Payable and Receivable and more.

If you are working with your bank, they will likely ask you to fill our FORMS.  These forms release information to them, like tax records.

We suggest you keep your financials easily available to you.  Save in a special folder on your computer, and have the documents printed and put into a safe place.

Each lender will collect these documents differently.

Some will have a portal, while others will request over email.

When submitting documents, follow these best practices:

  1. Make sure your documents are in PDF form
  2. Your information cannot be blacked out
  3. Ensure the FULL document is uploaded – do not pick & choose
  4. Send in the exact documents requested

Clients can sometimes feel nervous about uploading such personal documents.  If you are working with a legal and reputable person or company, you are safe.

Lenders, their reps, and affiliates are required to follow strict privacy laws or face potential jail time.  Research who you are using and make sure you aren’t sending any information to a gmail, yahoo, or non-domain email.

Other Business Documents

Lenders may ask for other documents during the underwriting process.

Depending on the type of funding you are applying for, here is a list of other documents you may need:

  • Credit Report – some companies will ask you to provide it for pre-approvals
  • Voided Check for the primary bank account
  • Lease Agreement & Proof of Lease Payments
  • Invoices
  • Client Contracts & Agreements
  • Utility Bill
  • Tax Lien information
  • Loan Contracts & Balances – if you have other loans/advances out

What else should you expect during the process?

Each lender will ask you to complete an application.  They will each have ownership requirements.

Many lenders will have you sign your contracts electronically.

There are lenders that will ask you to “wet sign” a contract and overnight it to them.  We see this a lot in equipment financing.  To “wet sign” a document is to physically sign it with a pen.

Always keep copies for yourself – digital and physical for your records.

You will be given the lenders address to send; we suggest you overnight it with tracking.

Most lenders will want 100% ownership to give an approval, while others will only need 51%.

You will come across lenders with weird requirements – we work with one that requires 76% minimum ownership on the application.

Each owner’s credit profile and financials will weigh on the offers you receive.

When you receive an offer, keep in mind they are what we call “soft offers”.  Like a pre-approval, this MAY is not the FINAL offer.

For online and alternative lenders, once you accept a soft offer, you will go into final underwriting.  This is when the offer can go from approved to declined or revised.

Most common reasons for a decline during underwriting:

  • Recently got funding elsewhere that wasn’t disclosed
  • The business has made dramatically less money for the month
  • Business credit is bad
  • Business has a prior default
  • Business Owners have a prior default with another company
  • Your account is currently over drafted
  • Owners are not US Citizens
  • You recently changed bank accounts

What happens next?

Online lenders will request a “funding call” or a “funding form” to as the last step in underwriting.

During the call you want to highlight the benefits of your business getting this capital.

Once the call is done, you will get your official APPROVAL and depending on the time of day the loan closes you will receive the wire within 24-48 business hours.  This will also depend on your bank.

Something to keep in mind, your bank matters.  There are lenders that don’t work with certain banks or bank-like platforms.

  1. Maverick
  2. CashApp
  3. Chime
  4. Bluevine
  5. CapitalOne

These are just a few banking options that can have you being declined from funding.  Also, if you have small credit unions, you may have a hard time getting funding into your account.

If you are wanting to explore your options for funding, visit our website at www.kapfunding.com and an expert will reach out with your options across the current marketplace.