CLEVELAND — Having all the information required for applying for a Small Business Administration (SBA) loan won’t mean anything if the application is incomplete or includes a hastily written business description.
The lender can count this carelessness as a character flaw, questioning whether someone who couldn’t complete paperwork properly could manage loan payments responsibly.
During a recent Service Corps of Retired Executives (SCORE) webinar, Raymond Graves, lead lender relations specialist with the SBA Cleveland District Office, shared that loan applications serve as first impressions that can make or break financing requests.
“The application should be filled out completely and legibly,” he says. “That’s going to demonstrate your character and professionalism."
In Part 1 and Part 2 of this series, we explored SBA loan programs and creditworthiness requirements. Today, we’ll conclude by walking through the application process and examining resources available to help drycleaning business owners secure financing successfully.
Pre-application Preparation
Successful loan applications begin long before the paperwork submission. Businesses should seek financing while they’re financially stable, for example, and not during crises.
“Don’t wait until you run out of cash to request a business loan,” Graves says. “It’s always bad. That’s like running out of runway if you’re trying to lift an aircraft off the ground.”
Personal financial management also becomes crucial during application periods. Major purchases should be postponed, Graves believes, since personal credit heavily influences business loan decisions. Any actions that could negatively impact credit scores should be avoided.
Relationship building with lenders can also pay dividends throughout the process.
“Don’t think of the lender as your enemy,” Graves says. “If you can show your enthusiasm and your love for the business to a lender, that makes a big difference.” Even if the initial application is declined, maintaining positive relationships can lead to future opportunities.
Patience and perseverance are essential qualities.
“Most people do get turned down, especially with a startup,” Graves says. “You’re going to get turned down a lot, but like getting a job, you only need one ‘yes.’”
Components of the Application
Modern loan applications are typically completed digitally, but the information requirements remain consistent across lenders. Standard applications request business details that include company name, DBA (doing business as) information, principal contact information, EIN (Employer Identification Number), DUNS number for business credit reports, entity type, and detailed business descriptions.
The business description section deserves particular attention, Graves says. While business plans might span 50 pages, application descriptions should be concise and focused. He recommends including the founding date, major milestones achieved and significant challenges overcome, but keep explanations “short and sweet so the lender can get through that pretty quickly.”
Detailed project cost information is also crucial for application success. Vague estimates like “a couple hundred thousand” for property purchases, Graves says, won’t satisfy lenders who need precise figures for underwriting decisions.
“You want to have as much real detail as you can,” he says. This might include signed purchase agreements, equipment invoices, contractor estimates or detailed cost breakdowns for expansion projects.
Also, Graves says that business owners should never ask lenders, “How much can I get?” Instead, they should determine exactly how much they need, calculate what they can afford in monthly payments, and present complete packages showing project costs, requested loan amounts and planned owner contributions.
Required Documentation Checklist
Comprehensive documentation packages typically include business federal tax returns for three years, business financial statements (balance sheets and income statements) for three years, interim financial statements if applying between fiscal year-ends, detailed debt schedules showing existing obligations, business plans with financial projections, and EIN confirmation letters.
Personal documentation requirements include personal tax returns for three years (all business owners), personal financial statements (essentially personal balance sheets), and supporting documents like purchase agreements, contractor estimates or equipment quotes.
The debt schedule deserves special attention since it directly impacts capacity calculations. This document should list each existing debt with creditor names, original amounts, origination dates, current balances, payment status, maturity dates and monthly payment amounts.
Navigating the Underwriting Process
Once applications are submitted, lenders begin underwriting — the process of evaluating creditworthiness using the five C’s framework. Lenders assess character through credit reports and background checks, analyze capacity through financial statement spreads and debt service coverage calculations, review capital adequacy through balance sheet analysis, evaluate collateral availability, and consider market conditions affecting the business.
For SBA loans, approved lenders submit requests to the SBA for loan guarantees. The agency reviews applications for eligibility and program compliance before issuing loan numbers authorizing lenders to proceed.
Timeline expectations vary significantly based on application complexity, lender workload, and borrower responsiveness to information requests. Simple, well-documented applications can move quickly, while complex projects or incomplete submissions can take months.
Federal Application Requirements
The SBA 7(a) and 504 programs require specific federal application forms in addition to lender applications, Graves says. These forms include extensive certifications regarding legal compliance, personal background and business eligibility.
“Take this very seriously,” Graves says. “If you falsify anything on the application, you may be subject to a penalty, especially if it’s a federal loan.”
Federal applications are available online through SBA.gov, allowing business owners to review requirements before meeting with lenders. Completing these forms in advance demonstrates preparedness and professionalism, according to Graves.
Common Application Mistakes
Mistakes can derail otherwise strong applications. Graves says that incomplete or illegible applications suggest poor attention to detail and questionable business management capabilities, while unrealistic cost estimates or vague project descriptions raise concerns about planning adequacy.
Missing documentation delays underwriting and frustrates lenders who work within tight timelines. Inconsistent information between different application components creates credibility questions.
Perhaps most critically, Graves has seen some business owners submit applications before they’re truly ready, hoping that securing financing would cover over fundamental business problems.
“This approach rarely succeeds and can damage relationships with lenders,” he says.
Final Recommendations
Success with SBA loan applications requires thorough preparation, complete documentation and realistic expectations about the process, Graves says. Business owners should take time to understand program requirements, strengthen their financial profiles and prepare comprehensive application packages before approaching lenders.
“It is not easy to get a small-business loan, but keep your patience and your perseverance, and keep a positive attitude,” he says. “Take advice, use advice, come back to lenders in six months, show them how you’ve grown and you will persevere and obtain financing.”
For Part 1, click HERE. For Part 2, click HERE.
Have a question or comment? E-mail our editor Dave Davis at [email protected].
