What We Look for in a Business Loan Application

Robins Financial Credit Union is dedicated to our mission to be Member Focused, Financial Partners, Community Proud. We empower our members with the financial knowledge and resources they need to make informed decisions and achieve their financial goals.

We are committed to helping local businesses grow and succeed. Whether you're a small business owner looking to expand operations, purchase equipment, or secure working capital, the right business loan can provide the support you need. Before we can approve a business loan, we carefully review each application to ensure the business is in a strong position to manage the debt responsibly.

To help you prepare, our commercial lending team has put together an overview of what we look for in a business loan application, along with tips for both established businesses and those still in the planning stage.

key factors we consider in a business loan application

When reviewing a business loan request, there are several important elements we focus on.

Supporting Documentation - Along with your business loan application, we may request supporting documentation that include, but are not limited to:

• Three years of business and personal tax returns
• A personal financial statement

These documents allow us to evaluate both the health of your business and your overall financial picture. Accuracy and detail matter here, so make sure everything is complete, consistent, and well-organized. Missing information or errors could delay the process or weaken your application.

Purpose of the Loan

A loan request must have a legitimate business purpose that aligns with what your business does. Having a clear explanation of how the funds will be used helps us understand the benefit to your business and ensures the loan serves a strategic purpose.

Ability to Repay

One of the most important questions we ask is "can your business afford to repay the loan?" The income generated by your business should be able to support the debt. Loan repayment should not rely on your personal income. If a business is not generating enough revenue to sustain the loan payments, it may not yet be in a position to take an additional debt.

Personal Creditworthiness

Even though you're applying for a business loan, your personal financial health is just as important. Business owners are typically required to personally guarantee the debt, which means you'll be responsible for repayment if the business cannot meet its obligations. That's why we review your personal credit score and overall credit history. A strong track record of managing personal credit responsibly gives us confidence that you'll treat business obligations with the same care.

Tips for Business owners applying for a loan

If you're already running a business and are preparing to apply for a business loan, there are a few steps you can take to strengthen your application:

1. Keep Detailed and Accurate Records - Lenders want to see reliable financial information. Keeping detailed records of revenue, expenses, and cash flow helps with tax compliance and provides a clear picture of your business's financial health. This can make the loan review process smoother and faster.
2. Use Accounting Software - Managing your finances with accounting software ensures accuracy and makes it easier to generate financial statements. Clean, organized records help build lender confidence and save you time when gathering documentation.
3. Build a Relationship with a Commercial Banker - One of the most valuable steps you can take is developing a relationship with a commercial banker. A banker who understands your business and your industry can provide advice, guidance, and support beyond just approving a loan. They can also serve as an advocate for your business when you're ready to apply for financing. At Robins Financial, we value relationships and strive to be long-term partners in your success.

Tips for Those thinking about starting a business

If you're still in the early stages of entrepreneurship, it's important to understand that preparing for a business loan takes time. Here are a few things to keep in mind:

1. Build a Foundation Before Borrowing - Starting a business requires planning, determination, and personal financial investment. Just as it takes time to build you personal credit, it also takes time to establish business credit. At Robins Financial, we require at least two years of operating history before we consider lending money to a business. This helps evaluate performance trends and repayment ability.
2. Create a Strong Business Plan - A well-thought-out business plan is essential, not only for your own direction, but also to show lenders how your business intends to succeed. Your plan should outline your business model, target market, revenue projects, and strategies for growth. If you're not sure where to start, visit your local Small Business Development Center (SBDC). This is a free source that offers expert guidance, business planning assistance, and financial education.
3. Understand the Myths Around Business Credit - There's a lot of misinformation online about starting a business and accessing credit. For example, creating an LLC does not automatically qualify you for a loan. Lenders look at the actual performance of the business and the financial history of the owner. Likewise, opening an LLC to write off personal expenses, like the cost of a personal vehicle, is not appropriate and can even raise red flags. Building legitimate business credit takes time, consistency, and responsible financial management.

The bottom line

At Robins Financial, we understand that business loans aren't just about dollars, they're about supporting dreams, creating jobs, and strengthening our communities. That's why we take the loan application process seriously and look at the full picture of both your business and personal financial health.

Whether you're preparing to apply for a loan now or planning to start a business in the future, the best thing you can do is stay organized, build financial discipline, and seek guidance when you need it.

If you're ready to take the next steps, our commercial lending team is here to help! We'll work with you to understand your goals, review your options, and find the best solution to support your business growth. Contact us today by calling 478-923-3773 x.2240.

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