Behind the Scenes: How Traditional Lenders Make SMB Loan Decisions

Macbook And Notebook

Looking for a small business loan can be intimidating if you aren’t familiar with the process. What information do they need? What numbers count in my favor? What are my chances?

Gaining access to working capital means understanding what traditional lenders look for before approving a small business loan. It’s not as simple as it should be here. Here’s how you can tell if you are a good candidate for a traditional lender.

Be Prepared with the Basics

Of course basic information, such as:

  • Type of business
  • Business overview and history
  • Personal credit score
  • Annual revenue
  • Purpose of loan

There are some types of businesses that some lenders won’t touch. Yes, there truly is a blacklist, but it is not standardized. It’s basically a general list of business types that have been known to default on their loans, such as businesses that are risky (i.e. projects done on speculation, like building large art installations in the hopes they will sell). Often budding entertainers get turned down for loans that are intended to be used to launch careers.

Discussion for Small Business Loans

Additional requirements

Of course, if your business is humming along brilliantly and your net revenue is stable and shows your business is on the upside, getting a loan should be easy if the amount is in line with your numbers. You will need around three to six months of business bank statements, personal and business income tax returns, business organization documents, income statement (P&L), and a balance sheet.

And that’s the easy part. You’ll also need to provide some or all of the following documents:

  • Tax statements
  • All relevant business licenses, permits, and approvals
  • Payroll records (previous 6 months)
  • Any company-owned real estate title deeds or leases
  • Accounts receivable system
  • Possible collateral, such as personal real estate deeds
  • Full disclosure of any liens or negative regulatory activity
  • Disclosure of any liens against business property
  • Patents, copyrights, and other intellectual property rights

Wait, there’s more…

After you’ve provided all of the necessary documents, you may be asked for additional information, such as other documents that can substantiate those previously provided. In the past, many retailers used cash registers and paper receipts. Systems were not automated and fully integrated the way most businesses operate today. So if each facet of your business works through a central system, it should be a bit simpler. But basically, the small business underwriter is in charge of making the final decision – so there is definitely an element of personal judgment. Having said that, don’t take first impressions lightly. Prepare yourself in the months leading up to filling out the application and make sure you have:

  • A strong credit score (hopefully over 600)
  • A consistent balance in checking account
  • Positive cash flow
  • Minimal or no current debt
  • Loan request amount

Aside from all of that, the approval will still be up to the underwriting professional with whom you are working, so personal judgment does enter in.

The “Direct” Approach


If all of that feels intimidating, we understand. Greenbox Capital has been in business for over 6 years and we consider ourselves an alternative lender. Why? Because we specialize in funding options for small- and medium-sized businesses that average a minimum of $7,500 in revenue for the previous three months.

Sure, we still require some documentation, but Greenbox Capital small business funding is unlike traditional lending institutions. We accept all business loan applications for companies that have been in operation for at least five months.

Our loan structure is simple and straightforward, and our application process takes only a minute. And unlike many other lenders, we don’t charge an application fee or an origination fee. Our fees include only the cost to set you up on our platform! Apply today or contact us to find out more about our fee structure.