How to Prepare Your Business for Financing
Getting approved for business funding isn't just about finding the right lender—it's about presenting your business in the best possible light. Many applications get denied or receive worse terms simply because business owners weren't prepared. The good news is that preparation is straightforward once you know what lenders are looking for.
This guide walks you through everything you need to do before applying for business financing. You'll learn what documents to gather, how to organize your financial information, steps to improve your approval chances, and common preparation mistakes that cost business owners money.
Whether you're planning to apply next week or next year, starting this process early puts you in the strongest position when you need capital.
Essential Documents Every Lender Wants
Different loan products require different documentation levels, but having these ready will cover most applications:
Business Bank Statements (3-6 months)
This is the most important document for most lenders. They're looking at your average daily balance, monthly deposits, and spending patterns. Download complete statements directly from your bank—lenders want official PDFs, not screenshots.
Business Tax Returns (1-2 years)
Required for larger loans and SBA products. Lenders use these to verify the revenue and income you claim. Make sure your returns match what your bank statements show—significant discrepancies raise red flags.
Personal Tax Returns (1-2 years)
Most small business loans require a personal guarantee, so lenders also want to see owner financials. This applies to all owners with 20%+ ownership stake.
Driver's License or Government ID
A clear copy or photo of your valid ID. This verifies your identity and confirms you're authorized to borrow on behalf of the business.
Business Formation Documents
Depending on your business structure: articles of incorporation, operating agreement, partnership agreement, or DBA certificate. Some lenders also want your EIN confirmation letter.
Financial Statements (for larger loans)
SBA loans and larger term loans often require a current profit & loss statement and balance sheet. If you don't have these, your accountant or bookkeeper can prepare them.
Improving Your Credit Before Applying
Your personal credit score significantly impacts your funding options and rates. Here's how to strengthen it:
Check Your Credit Reports
Get free reports from annualcreditreport.com. Look for errors, outdated accounts, or fraudulent activity. Dispute anything incorrect.
Pay Down Credit Card Balances
Credit utilization (how much of your available credit you're using) is a major factor. Try to get below 30% utilization on each card.
Don't Close Old Accounts
Length of credit history matters. Keep old accounts open even if you don't use them much.
Avoid New Credit Inquiries
Each hard inquiry can lower your score. Don't apply for new credit cards or loans in the months before seeking business funding.
Bring Past-Due Accounts Current
Late payments hurt your score significantly. If anything is behind, bring it current before applying.
Strengthening Your Business Profile
Beyond credit, lenders evaluate your business itself. Here's how to put your best foot forward:
Clean Up Your Bank Account
Avoid overdrafts, maintain consistent balances, and make regular deposits. Lenders analyze your banking patterns closely for 3-6 months before your application.
Separate Business and Personal
If you're still mixing finances, open a dedicated business account now. Commingled funds make lenders nervous and complicate underwriting.
Update Your Bookkeeping
Catch up on categorizing transactions and reconciling accounts. Accurate books signal a well-managed business and speed up the process.
Establish Business Credit
Open trade accounts with vendors who report to business credit bureaus. Pay them on time or early to build a positive payment history.
Verify Your Business Listings
Make sure your business name, address, and phone match across your state registration, bank accounts, and credit applications.
Document Your Revenue
If you have significant cash revenue, start depositing it through your business account to create a paper trail lenders can verify.
Common Preparation Mistakes
- Waiting until you desperately need money: Rushing leads to poor decisions and limits your options. Start preparing months before you need funding.
- Not knowing your numbers: When a lender asks about your revenue, profit margins, or outstanding debts, you need to answer confidently. Know your financials.
- Applying everywhere at once: Multiple hard inquiries can damage your credit score. Use a broker or do research first to target the right lenders.
- Hiding problems: Lenders will find issues eventually. It's better to address them upfront with context than have them discovered during underwriting.
- Incomplete applications: Missing documents slow everything down and can lead to denials. Submit complete packages to avoid delays.
Preparation Timeline
Here's an ideal timeline if you know you'll need funding:
How Goodlane Group Helps You Prepare
Goodlane Group doesn't just match you with lenders—we help you understand what different lenders require and how to position your application for the best results.
When you work with us, we review your business profile and let you know which documentation you'll need before you spend time gathering it. We can also advise on timing if there are steps you should take to improve your chances before applying.
Our network of 50+ lenders means we know what each one is looking for. This insight helps us guide you toward the products where you're most likely to get approved with the best terms.
Preparation Checklist
- 3-6 months business bank statements
- 1-2 years business tax returns
- Personal tax returns for all owners
- Valid government ID
- Business formation documents
- Credit score checked and improved
- Bookkeeping up to date
- Know your numbers (revenue, expenses, debts)
Ready to Get Started?
Our team can review your situation and tell you exactly what you need to prepare. There's no cost and no obligation.