Know what details go into a strong credit application and how you can prepare.
If you’re currently seeking credit for your business, you’re not alone. 37% of businesses applied for a loan or line of credit in past 12 months. To give yourself a better chance of getting approved for financing, whether it’s a business line of credit, business credit card, or loan, it’s important to develop a strong credit application. Here are four things to consider when preparing your application:
1. Credit purpose
When you apply for credit, the financial institution will want to know how you plan to use the money you borrow. Whether it’s for everyday purchases, equipment, payroll, or inventory, you should have a clear understanding of why you need credit. In addition, make sure your credit request is practical. If you ask for more money than your business can realistically repay, the lender may deny your loan request or counteroffer a lower amount. Before you apply for credit, you’ll want to determine whether your business is ready for credit.
2. Credit history
Before making a credit decision, the lender will pull reports to review your personal and business credit history They check whether you have a history of making timely payments and how much debt you carry. Recent credit inquiries may also affect a lender’s credit decision. This information will help lenders make a decision about your application. New businesses may not have a business credit score at all because they don’t have a credit history yet. If you have a weaker personal or business credit report, take steps to improve it If you have a lower personal or business credit report, you may want to take steps to raise it before applying again.
3. Company finances
Your company’s cash flow also plays a key role in your ability to get approved for credit. Lenders will look at how much revenue your business generates to ensure you can repay any additional debt. Lenders may also request collateral, which could include business equipment or real estate. Make sure your company’s financial data is accurate before submitting your credit application.
4. Application and accurate documentation
Gather your financial documents and fill out the application. Your application should be complete and free of errors. Check to make sure the following information is accurate prior to submission:
- Date your business was established: Provide the date your company was established, not the date ownership changed or the entity type was modified.
- Yearly business sales: Include the gross sales listed on your business’s prior tax return.
- Yearly income: State your business’s full annual earnings.
- Business name and address: Make sure the business name and address you list on the application match your articles of incorporation.
- Ownership: Include accurate ownership information for your business.
While numbers are extremely important to the application, that’s not all lenders are looking at. Lenders also consider factors like your business plan or career background. Understanding what lenders look for can improve your approval chances. If your recent credit application was denied, you can take several steps to improve your chances next time.
If you have questions about a credit application, make an appointment to talk to a banker.
Source: “2025 Report on Employer Findings from the 2024 Small Business Credit Survey,” Small Business by Federal Reserve Banks
