Most people realize that when they apply for a financing, the funds aren’t generally advanced on the spot.
The reason for this is that lenders require a process of due diligence – to make sure that the application is correct, that the funds are appropriate, verifying that the credit history of the applicants is acceptable, verifying that the asset to be purchased exists and is sound, and other internal checks and balances.
Sometimes frustratingly for business owners and managers, this process can take from a just a few days to much longer.
The good news, is that a well-prepared applicant can accelerate the approval of his/her application simply by assuring that absolutely everything is in order, before submitting the application.
Here’s 52 ways to get your financing application approved – quicker:
Take advantage of the seemingly innocuous questions that the lender generally asks near the front of the application:
Like any service business, lenders want to be helpful. Answering questions truthfully and completely communicates that the applicant respects their internal processes/need for data, and provides the underwriter with a complete toolkit from which she can assess your application.
- ‘What is the purpose of the loan?’ – be specific (often this will be a checkbox-style)
- ‘Funds required’ or ‘Amount Required’ – be specific (show written supplier estimates, cash flow projections, and more)
- Funds required by – state a date here (“tomorrow” is unreasonable)
Unsure of anything here? Drop us a line – we can connect you with a pro, who in real-time can guide you through the application process.
Answer marketing-related questions completely.
While these aren’t necessary, it might be helpful to your underwriter and lender. These may include a questionnaire related to your priorities, including leading items such as:
- Low rates at origination
- Low rates at renewal
- Flexible pre-payment plans
- Flexible payment plans
- Access to credit life insurance
- Access to other services
Complete all ‘Applicant Information’.
Have you ever played telephone tag? Imagine your lender going back and forth like this with you (and maybe hundreds of other applications) – just to complete missing or incomplete information. Don’t let this happen, as this will slow your application down.
Complete applicant information makes it easier for lenders to assess your application, and avoids the need to go back-and-forth requesting additional information.
- Select title (Mr/Ms, etc)
- Provide all and accurate telephone numbers
- Provide all and accurate email addresses
- Clearly spell your first and last name, and provide your middle name/initial where asked
- Provide your SIN (Social Insurance Number) – this is to clearly identify that it is the right ‘you’, to request a credit rating (yes – in many cases, a personal credit rating will be required)
- Provide information where requested, about your current and prior residences (complete addresses, including unit numbers and postal codes). Be prepared to provide landlord names, monthly rental, monthly mortgage payments, and other information. This is requested to ascertain your stability as a borrower – a lender will want to know if you are a person who ‘puts down roots’, or who only stays in one place for a short period of time – both of which will have an impact on their decision, and the price of your loan.
- Provide the same complete and accurate information of each and every co-applicant
Complete all information related to your current and prior employers.
The purpose of this process is to assist the lender in assessing your ability to re-pay your financing, on-time.
You’ll be asked many things, including:
- Employer’s name (company), address, city, postal code, phone, email address
- The industry that your employer is in, and how long they’ve been in business
- Your position with the company
- How long you’ve been with them
- Your salary – NOT your bonuses, commissions, or other income. ONLY report your salary.
- If you have bonus and commission income, or self-employed income, you should report this, and attach supporting documentation in the form of T4’s.
- Depending on your employment history, you’ll need to provide this same information for two, three, or more employers.
- Take your time NOW, and be prepared. Collect the information now.
- Provide this same information for every co-applicant or co-signer.
Provide Complete and Detailed information about your business.
Lenders will want to learn about the property and verify its value and existence. If you’re applying to finance a piece of e
Here’s a few things you can do to accelerate the process:
- Complete financial statements
- Budgets, including projections with/without anticipated financing
Provide detailed information about the assets to be financed.
Lenders need to be assured that the assets exist, are in good condition, and have an assessable residual/salvage value. A good valuation of the asset to be financed reduces risk (and interest rate). Disclose and provide supporting documentation for all everything. Including:
- Be prepared to provide bank account balances, and account locations if asked (eg: CIBC Main Branch, Kingston, ON)
- List all investment accounts of the business (or personal, if it’s a small business)
- List all insurance coverage, including asset insurance, life and disability insurance
- List all other assets
List your liabilities in the same level of detail as your assets.
Lenders will want to assess your/your business net worth (assets-liabilities) and compare this with your/your business credit rating and TDSR to get a complete picture of how to fund your request. Disclose and provide supporting documentation for all liabilities related to:
- Mortgages on current, investment properties
- Liens on any property
- Credit card balances (itemize these)
- Car payments (itemized by vehicle)
- Child support/alimony payments (itemized by date)
- Student loans
- Wage garnishments
- Other liabilities
- Tax liabilities (balances due to the CRA)
- Unsecured lines of credit (even if the balance is zero)
- Secured lines of credit (include balance and authorized amount, including supporting documentation)
- Leases (business, cars)
- Total liabilities
- Provide this same information, for every co-applicant or co-signer
Finally, provide a note to the lender that ties it all together.
- Make this a 2-3 paragraph statement that summarizes your net worth, credit history, and income history and prospects
- Summarize your property ownership and intended use of funds
- Provide an accurate 24/7 contact number and email address
- Attach supporting documents for every item.
- Include your business plan