A strong loan request answers five questions before the bank asks them. Businesses that walk in with these answers move through review faster and get proposals matched to their real needs.

5 Key Questions for Your Business Loan Request

1. How much funding do you need?
2. What will the funds be used for?
3. How long do you need to repay the loan?
4. How will the loan be repaid?
5. What collateral will secure the loan?

Example 1: Small Business Equipment Loan in Minnesota

A manufacturing business in Minnesota might structure their loan request as follows:

We are seeking a small business loan of $500,000 to purchase manufacturing equipment. This equipment will reduce expenses by $100,000 annually and improve production speeds. With a useful life of 10 years, we request a 7-year loan, repaid through cash flow and cost savings. As collateral, we will offer a purchase money security interest in the equipment and business assets.

Example 2: Real Estate Loan for Minnesota Businesses

A company purchasing property for expansion could write:

We need a real estate loan of $1,500,000 to buy a 24,000 SF office/industrial building in Anoka, MN. This transition from leasing to owning will reduce long-term costs. The building, built in 2001, is in good condition but requires $250,000 in improvements. We will repay the loan using cash flow and rental savings.

These examples give our lenders what they need to tailor an accurate proposal the first time.

Six items cover most of what any Minnesota bank will ask for. Gather them before your first meeting and you remove weeks from the timeline.

1. Brief History of the Company, Ownership, and Management

Your business's story matters to us. Share the history of your business and its achievements, key management team experience, and ownership structure. Understanding your background helps us craft customized loan solutions.

2. Three Years of Business and Personal Tax Returns

Tax returns give us insight into your financial performance and stability. We evaluate net income, depreciation, interest, liquidity, and capital, along with any one-time events impacting your results.

Pro tip: highlight unusual or one-time events to give us a clearer picture of your cash flow.

3. Personal Financial Statements of Principals and Guarantors

Personal financial stability is often key to securing a business loan. A personal guaranty is typically required, and these statements help us assess the financial health of business owners.

4. Current Income Statement and Balance Sheet

Tax returns may not reflect your current performance, so we also request up-to-date financials, including revenue changes such as new contracts or customer losses, and recent equipment acquisitions. Complete, accurate information speeds up the decision.

5. Sales, Accounts Receivable, and Accounts Payable Concentrations

We analyze sales concentrations over 10% of gross revenue and aging reports for accounts receivable and payable. Providing these reports ensures a thorough underwriting process.

6. Purchase Agreements or Invoices

If you're financing equipment or real estate, include purchase agreements or invoices so we can verify the purchase, the terms, and associated costs that may not be financeable.

Download the Complete Commercial Loan Applicant Checklist (PDF)

Underwriting is how a bank confirms your business can repay a loan. At Security Bank & Trust Co., that means verifying your documents, analyzing cash flow, and structuring a loan that fits both your plans and safe lending practice. Knowing what we review, and why, removes the guesswork.

What is Loan Underwriting?

Loan underwriting is how we evaluate your business's financial health and assess the risks of the loan. It involves verifying your documents for accuracy, analyzing key measures, and ensuring the loan is structured to meet both your needs and our lending guidelines. Our goal is to make the process smooth, transparent, and efficient, so you can focus on growing your business.

How Long Does the Process Take?

Most standard business loan decisions at Security Bank take two to three weeks from a complete application:

• Initial review: 3 to 5 business days to verify submitted documents
• In-depth underwriting: 5 to 10 business days to analyze financials and assess risk
• Proposal stage: typically within 2 weeks, depending on complexity

Pro tip: organized, complete financials upfront are the single biggest driver of a fast answer.

What We Look for During Underwriting

Five factors drive most business credit decisions:

• Cash flow: your ability to repay the loan from business operations. This is the heart of every review.
• Collateral: assets that secure the loan, such as real estate, equipment, or receivables.
• Credit history: personal and business track record.
• Management experience: your team's depth in the industry.
• Industry conditions: market trends that could affect your business.

Key Financial Measures, in Plain English

These are measures commonly used in business lending. They do not define your success as a business, but they help us understand risk and tailor the right structure:

• Debt Service Coverage Ratio (DSCR): EBITDA divided by annual debt payments. Answers one question: does the business earn enough to cover its loan payments with room to spare? For a deeper look with worked examples, see How much can my business borrow?
• Current Ratio: current assets divided by current liabilities. Measures short-term stability.
• Quick Ratio: cash, receivables, and marketable securities divided by current liabilities. Measures immediate liquidity without counting inventory.
• UCA Cash Flow Coverage: net cash after operations against current debt and interest. Confirms real cash, not just paper earnings, covers payments.
• Revenue Growth Trend: how the business is expanding over time.
• Debt to Tangible Net Worth: leverage compared to industry peers.

Common Challenges and How to Overcome Them

• Incomplete documentation: missing documents slow the process. Use our Commercial Loan Application Checklist and review our comprehensive guide.
• Unrealistic loan requests: ensure your requested amount aligns with your cash flow and repayment ability.
• Unexplained financial fluctuations: be upfront about one-time events, like major sales or unexpected losses, that impacted your financials.

Financing commercial real estate? Underwriting works differently for income property. See our guide to commercial real estate underwriting.

Four structures cover most business borrowing needs. Here is how to match the loan to the purpose, with full detail on our business financing page:

We also work alongside Minnesota resources such as the Department of Employment and Economic Development, local municipalities across our 21 branch communities, and the Initiative Foundations. For the full landscape, see our Ultimate Guide to Minnesota Business Loans.