Securing a commercial loan isn’t just about filling out paperwork—it’s about showing lenders that your business is financially sound. Whether expanding, refinancing, or investing in real estate, a well-prepared commercial loan application lays the groundwork for a smoother, faster approval process.
From evaluating your financial metrics to organizing documentation and finding the right lending partner, this step-by-step commercial loan application checklist will walk you through the key elements every business should consider when preparing to apply for a business loan.
Step 1: Assess Your Financial Health
Before approaching any lender, evaluate your business’ financial condition. Lenders want assurance that you can repay the loan consistently and without strain.
Focus on these key metrics:
- Debt Service Coverage Ratio (DSCR) – Ideally, you should be above 1.25 to demonstrate that you can cover debt payments.
- Net Operating Income (NOI) – Provides a snapshot of profitability before financing costs.
- Loan-to-Value Ratio (LTV) – Indicates risk to the lender; lower ratios are more favorable.
Understanding where your business stands financially also helps you anticipate how lenders may view your application. If you're unsure how your numbers stack up, this is a great time to consult with advisors or financial professionals.
CBS partners with credit unions to analyze these financial indicators and offer structuring solutions when metrics fall short, such as adjusting terms or recommending alternative collateral.
Step 2: Define the Purpose of the Loan
Lenders don’t just want to know that you need funding—they want to know why. A clear and focused loan purpose helps determine risk, loan type, and repayment terms.
Consider outlining the following:
- Whether funds will be used for real estate, equipment, working capital, or expansion
- How the loan supports your long-term business goals
- How repayment will be supported by business performance
This clarity demonstrates that you’ve done your homework—and it builds confidence in your business model.
CBS helps credit unions align loan structures with borrowers' objectives, ensuring both sides move forward with purpose and clarity.
Step 3: Prepare a Detailed Business Plan
A strong business plan can tip the scales in your favor, especially if your business is newer or expanding into uncharted territory.
Your plan should include:
- Market analysis and competitive positioning
- Projected income statements and cash flows
- Leadership bios and operational structure
Your plan acts as both a road map and a credibility tool. The more complete and realistic it is, the easier it will be for a lender to buy into your vision.
CBS underwriters carefully review business plans for financial feasibility and market alignment to help credit unions mitigate risk while supporting growth-oriented lending.
Step 4: Understand the Loan Terms
No two commercial loans are identical. Knowing what to expect—and what to negotiate—helps ensure you don’t agree to terms that could strain your business.
Common elements include:
- Loan type: Term loan, line of credit, CRE financing, etc.
- Interest rate: Fixed or variable, and the associated risk
- Amortization schedule: How the loan is paid down over time
- Prepayment conditions: Penalties or balloon payments to watch for
Understanding these elements upfront empowers you to ask better questions—and to avoid costly surprises later.
Credit unions partnered with CBS often offer customized terms that better fit borrower needs, especially for projects with nontraditional risk or timelines.
Step 5: Organize Legal and Business Documents
A lender’s decision hinges on documentation. Having everything prepared in advance signals professionalism and minimizes delays.
You’ll likely need:
- Articles of incorporation or business licenses
- Federal tax returns (2–3 years recommended)
- Current balance sheet, profit & loss statement, and cash flow
- Property information (leases, appraisals) for CRE loans
- Ownership and management structure details
Take the time to double-check that everything is accurate and up to date.
CBS helps credit unions streamline document review, saving time and identifying missing or inconsistent materials early in the process.
Step 6: Consider Your Creditworthiness
Your credit history—business and personal—tells lenders how reliably you’ve handled debt in the past. Lenders evaluate:
- Business credit scores and history
- Personal FICO scores (especially for small business owners)
- Public records like tax liens, bankruptcies, or collections
If any red flags exist, be upfront. Proactive communication, supported by explanations and an improvement plan, often makes a strong impression.
CBS works with credit unions to evaluate credit profiles using tools like Dun & Bradstreet and offers structuring solutions for higher-risk but promising borrowers.
Step 7: Source the Right Lender (That’s Where CBS Comes In)
Not all lenders approach deals with the same flexibility. While large banks often apply rigid underwriting models, credit unions can take a more tailored approach.
Credit unions that partner with CBS gain access to:
- In-depth risk and tenant evaluations
- Custom loan structuring to support borrower goals
- Real-time market insights and compliance expertise
If you're looking for a lender who sees the whole picture—beyond the numbers—working with CBS can make a meaningful difference.
We provide financing for the following types of loans:
- Commercial real estate
- SBA 7(a)
- SBA 504
- Construction
Learn more here.
Preparation Pays Off
Being thoroughly prepared improves your chances of loan approval and helps you secure loan terms that support sustainable business growth. Whether you're reviewing financials, drafting a business plan, or choosing the right lending partner, the steps you take now will shape your borrowing experience. But just as important as preparation is finding a lender who understands your business—and your industry.
Historically, many business owners have defaulted to lenders they know personally or those conveniently located nearby. However, a lender unfamiliar with your industry may misjudge your business’ potential or even avoid lending to your sector during economic uncertainty. According to Forbes, working with a lender who understands your vertical is especially critical in challenging economic conditions, as they are more likely to evaluate your business accurately and offer terms that align with your growth potential.
Finally, be ready to answer the opening question many lenders ask: “So, tell me about your business.” This is your chance to make a lasting first impression. Go beyond the data points and share your mission, your journey, and what differentiates you in the market. A concise, authentic story not only adds a personal touch, but can help your application rise above the rest.
Ready to move forward with confidence?
Contact us today to learn how CBS can support your business’ financing needs.
Disclaimer. The information and data contained in this multimedia content (the “Content”) are provided for informational purposes only, and do not necessarily represent the views or opinions of Cooperative Business Services, LLC (“CBS”). The Content, and the appearance of the Content on, by or through CBS’ website, email, or technological infrastructure does not constitute an endorsement by CBS, its affiliates, owners, officers, directors, or employees (or their successors and/or assigns). Information in the Content cannot be relied upon by any recipient for any business, legal or financial decisions.
