FAQ

No. These are preliminary items used to evaluate the opportunity and define the structure of the request. They allow underwriting to assess ownership structure, income sources, expense profile, industry risk, collateral, and other variables tied to the loan request.

Based on that initial review, a customized and comprehensive checklist will be issued. The final documentation requirements depend on factors such as entity type, number of guarantors, complexity of income, loan size, property type, and program guidelines (SBA, conventional, etc.).

Submitting these preliminary items enables underwriting to prepare a precise, deal-specific checklist and move the file forward efficiently.

Financial statements are prepared to reflect the operational performance and financial position of the business, often on an accrual basis. Business tax returns are prepared under tax reporting rules, which may include deductions, depreciation methods, and adjustments designed to minimize taxable income.

As a result, net income, expenses, and asset values can differ significantly between the two documents. Financial statements allow the underwriter to geta details breakdown of sources of income, detailed expenses, assets, and liabilities.

Your business debt schedule must be complete, accurate, and fully transparent. Include every obligation under the company—bank loans, lines of credit, credit cards, equipment loans, vehicle loans, capital leases, operating leases, SBA loans, private notes, and any other outstanding liabilities. For each debt, provide the lender name, original amount, current balance, monthly payment, interest rate, maturity date, and collateral (if applicable).

If any obligation is omitted and later identified through bank statements, credit reports, or tax return analysis, underwriting may treat it as an undisclosed monthly expense. This directly impacts debt service coverage and can reduce loan proceeds, delay approval, or create credibility concerns. Full disclosure upfront protects your file and keeps the approval process moving efficiently.

An operating agreement is the governing document for a Limited Liability Company (LLC). It outlines ownership percentages, member roles, management authority, profit distribution, voting rights, and procedures for admitting or removing members. It defines how the LLC operates internally.

Bylaws, on the other hand, apply to corporations. They establish how the corporation is governed, including the roles of directors and officers, shareholder rights, meeting procedures, voting protocols, and corporate decision-making structure.

In short: operating agreements govern LLCs; bylaws govern corporations. Both define control, authority, and structure—but they apply to different legal entity types.

Your personal financial statement should be thorough, accurate, and fully supported. List all assets and liabilities in detail, including cash accounts, investment accounts, retirement funds, real estate (with estimated market value and associated debt), business ownership interests, notes receivable, and any contingent liabilities. On the liability side, disclose mortgages, personal loans, credit cards, guarantees, tax obligations, and any other outstanding debt.

The stronger and more transparent the sponsor’s financial profile, the better the overall risk assessment. Lenders evaluate liquidity, net worth, leverage, and global cash flow when determining risk rating, structure, and approval strength. Higher liquidity and net worth relative to the loan request reduce perceived risk and improve terms. Incomplete or vague disclosures can trigger additional scrutiny, delay underwriting, or negatively impact the credit profile.

A well-prepared personal financial statement demonstrates financial capacity, stability, and credibility—key factors in securing favorable loan consideration.

No. A purchase agreement is not required for initial prequalification. However, to move from prequalification to formal underwriting and avoid delays, you should begin pre-screening the request early and continuously update, gather, and analyze documentation as time progresses.

Lenders will require current documentation at submission. This means you should always maintain the most recent month’s bank statements, updated financial statements, and any newly executed agreements. If documents become outdated, underwriting will pause the file until updated versions are received. Proactive updates keep momentum and prevent the file from getting stuck in document refresh cycles.

While some lenders may formally require documentation starting at 20% ownership, we request information beginning at 10% to prevent avoidable surprises during underwriting.

In practice, we have encountered many instances where business activity, source of income, related-party transactions, global cash flow exposure, or risk factors identified during review prompted an underwriter to request documentation from individuals with smaller ownership percentages. In certain cases, underwriting can require documentation from anyone with any ownership interest if their involvement materially impacts risk.

By reviewing 10% or greater ownership upfront, we proactively identify potential concerns, clarify income sources, and prepare clear explanations before the file reaches formal credit review. This approach strengthens the presentation, reduces last-minute conditions, and positions the file for a smoother underwriting process.

A rent roll is required to verify the property’s income, tenant composition, and lease structure. It allows underwriting to confirm rental rates, lease terms, expiration dates, vacancy levels, tenant concentrations, reimbursements, and concessions.

The rent roll is reconciled against financial statements and tax returns to validate reported income. It also helps assess rollover risk, cash flow stability, and the overall strength of the tenant base. Without an accurate and current rent roll, underwriting cannot properly evaluate income durability or calculate reliable debt service coverage.

Tax returns can be used as a starting point, but they are not always sufficient on their own. Tax returns are prepared for reporting income to taxing authorities and often include deductions, accelerated depreciation, and other adjustments that reduce taxable income. They do not always reflect the true operational performance or current financial position of the business.

Underwriting will require interim financial statements (year-to-date profit and loss and balance sheet) to assess current performance, liquidity, and debt service capacity. If financial statements are not readily available, they should be prepared as soon as possible to avoid delays and to provide a clearer representation of the business’s strength. The more current and organized your financial reporting, the stronger and more efficient the credit evaluation process will be.

Yes. Full disclosure is strongly recommended, regardless of how much time has passed.

Lenders utilize third-party background screening platforms such as LexisNexis to conduct public records searches. These searches can reveal criminal records, civil judgments, liens, bankruptcies, UCC filings, and other legal matters—even if they occurred many years ago. Bankruptcy filings, in particular, remain part of the public record permanently, even though credit reporting agencies may stop displaying them after a certain period.

Failure to disclose material legal or credit history can raise credibility concerns and create significant underwriting issues if discovered during background checks. Proactive disclosure allows underwriting to evaluate context, request explanations if necessary, and properly assess risk without jeopardizing the integrity of the file.

Transparency upfront protects the transaction and strengthens the overall presentation.