How to Increase Your Approval Odds
Getting approved for business funding isn't just about meeting minimum requirements—it's about presenting your business in the best possible light. This guide shows you exactly how to improve your chances of approval and get better terms.
Understanding What Lenders Look For
The Lender's Perspective
Lenders are trying to answer one fundamental question: "Will this business repay us?"
They evaluate this through:
| Factor | What They're Assessing |
|---|---|
| Revenue & Cash Flow | Can you afford payments? |
| Time in Business | Are you stable? |
| Credit History | Have you repaid others? |
| Industry | Is your sector risky? |
| Purpose | Will funding be used wisely? |
Pre-Application Optimization
30 Days Before Applying
Bank Account Cleanup:
| Action | Impact on Approval |
|---|---|
| Maintain higher average balance | Shows financial stability |
| Avoid NSF/overdrafts | Critical for alternative lenders |
| Deposit consistently | Demonstrates reliable revenue |
| Reduce unnecessary transfers | Cleaner statement appearance |
Credit Improvement:
| Action | Potential Impact |
|---|---|
| Pay down credit card balances | +10-50 points in 30 days |
| Dispute any errors | Varies |
| Become authorized user on good account | +10-30 points |
| Don't apply for new credit | Prevents score drops |
Week Before Applying
Documentation Preparation:
- ● Download last 4-6 months of bank statements (complete, all pages)
- ● Get processing statements (for card-based businesses)
- ● Have current P&L ready (for larger loans)
- ● Locate business license and registration
- ● Prepare valid ID
- ● Have voided check ready
- ● Know your EIN/Tax ID
Improving Key Metrics
Strengthen Your Revenue Picture
What Lenders Want to See:
| Metric | Ideal | Minimum |
|---|---|---|
| Monthly Deposits | Growing or stable | Consistent |
| Deposit Sources | Business revenue | Not loans |
| Deposit Timing | Regular, predictable | Somewhat consistent |
| Monthly Average | $25,000+ | $10,000+ |
Tactics to Improve Revenue Appearance:
- ●Process more through business account: Route all revenue through the account you'll use for funding
- ●Time your application: Apply after strong months
- ●Consolidate accounts: Multiple accounts can dilute appearance
- ●Avoid cash deposits: Electronic deposits are more verifiable
Optimize Cash Flow Presentation
Bank Statement Red Flags to Avoid:
| Red Flag | Why It's Bad | How to Fix |
|---|---|---|
| NSF fees | Shows cash management issues | Maintain buffer in account |
| Low daily balances | Indicates tight margins | Keep higher average balance |
| Many small loans | Shows cash dependency | Pay down before applying |
| Volatile deposits | Suggests unstable revenue | Wait for more consistent period |
Credit Score Quick Wins
Fastest Ways to Improve Score:
| Action | Timeline | Potential Gain |
|---|---|---|
| Pay down card to under 30% utilization | 30 days | 20-40 points |
| Pay down card to under 10% utilization | 30 days | 10-20 additional points |
| Dispute errors with bureaus | 30-45 days | Varies |
| Have late payments updated if paid | 30-45 days | Varies |
| Settle collections for deletion | 30-60 days | Significant |
Application Strategy
Timing Your Application
Best Times to Apply:
| Timing | Advantage |
|---|---|
| After strong revenue month | Higher deposits on statement |
| Mid-week (Tue-Thu) | Faster processing, more attention |
| Mid-month | Avoids end-of-month rush |
| After major payments received | Better cash position |
Times to Avoid:
| Timing | Disadvantage |
|---|---|
| Friday afternoon | May sit over weekend |
| After NSF or overdraft | Shows in recent statements |
| During seasonal low | Lower revenue appearance |
| End of quarter | Lenders may be at capacity |
Choosing the Right Product
Match your qualifications to product requirements:
| Your Profile | Best Products |
|---|---|
| New business (under 1 year) | MCA, factoring |
| Moderate credit (600-680) | Online loans, equipment financing |
| Strong profile | Shop all options for best terms |
| Urgent need | Start with fastest options |
Applying to Multiple Lenders
The Strategic Approach:
- ●Research first: Identify 3-5 good fits
- ●Apply within 14 days: Multiple inquiries count as one
- ●Compare offers: Don't accept first offer
- ●Use leverage: Better offers = negotiating power
Making Your Application Stronger
Complete and Accurate Information
| Error | Impact | Prevention |
|---|---|---|
| Incomplete application | Delays, possible rejection | Double-check all fields |
| Inconsistent information | Raises red flags | Verify against documents |
| Outdated documentation | Returns for updates | Use recent statements |
| Wrong business name | Verification fails | Match exactly to legal documents |
Presenting Your Business Story
Be prepared to explain:
| Topic | What to Address |
|---|---|
| Industry | What you do and how you make money |
| Revenue Trends | Any fluctuations and reasons |
| Use of Funds | Specific, business-building purposes |
| Repayment Plan | How funding will generate returns |
| Credit Issues | Circumstances and recovery (if applicable) |
Purpose of Funds
Strong use cases improve approval odds:
| Strong Purposes | Why Lenders Like Them |
|---|---|
| Inventory purchase | Generates immediate revenue |
| Equipment purchase | Clear business purpose |
| Marketing campaign | Growth-oriented |
| Covering A/R gap | Temporary, tied to incoming payment |
| Expansion | Shows business growth |
| Weaker Purposes | Why Lenders Hesitate |
|---|---|
| "General working capital" | Vague, unclear need |
| Paying off other debt | May indicate cash flow problems |
| Personal expenses | Red flag |
| Speculative investment | High risk |
Addressing Potential Concerns
If Your Credit Is Challenged
Proactive Strategies:
| Strategy | How It Helps |
|---|---|
| Prepare explanation | Shows self-awareness |
| Highlight improvements | Demonstrates trajectory |
| Emphasize business strength | Shifts focus to cash flow |
| Offer additional security | Reduces lender risk |
Sample Explanation: "My credit was impacted by [specific event] in [year]. Since then, I've [specific improvements made]. My business now generates consistent revenue of [amount] monthly, and I've maintained positive cash flow for [time period]."
If Your Business Is New
| Challenge | Solution |
|---|---|
| Short operating history | Emphasize owner's industry experience |
| Limited financial track record | Highlight strong recent months |
| No business credit | Focus on personal credit strength |
| Small revenues | Apply for appropriately-sized funding |
If You Have Existing Debt
| Concern | How to Address |
|---|---|
| Current obligations | Calculate DSCR showing you can handle more |
| Multiple MCAs | Show payment history is strong |
| Recent funding | Explain how it was used productively |
During the Process
Responding to Underwriters
Best Practices:
| Practice | Why It Matters |
|---|---|
| Respond quickly (within hours) | Shows organization and interest |
| Provide complete information | Avoids back-and-forth |
| Be honest | Inconsistencies kill deals |
| Have documentation ready | Speeds up process |
Common Requests and How to Prepare
| Request | What to Have Ready |
|---|---|
| Additional bank statements | Full statements from all business accounts |
| Proof of business | License, registration, lease |
| Explanation of deposits | Know sources of larger deposits |
| References | Vendors, clients who can verify business |
| Verification call | Know your numbers (revenue, time in business, etc.) |
If Initially Declined
Understanding the Decline
Common Decline Reasons:
| Reason | Next Steps |
|---|---|
| Insufficient revenue | Wait for growth, try lower amount |
| Time in business | Wait until threshold met |
| Credit issues | Work on credit, try MCA |
| Too much existing debt | Pay down, wait, then reapply |
| Industry restrictions | Find lenders specializing in your industry |
Appeal or Reapply Strategy
| Timeline | Action |
|---|---|
| Immediately | Ask for specific decline reason |
| Within 1 week | Apply to different lender if reason is lender-specific |
| 30-60 days | Reapply after addressing issues |
| 90+ days | Significant improvements may warrant fresh applications |
Checklist: Maximum Approval Odds
Pre-Application
- ● Bank account has been stable for 60+ days
- ● No recent NSFs or overdrafts
- ● Credit card utilization under 30%
- ● All documentation gathered
- ● Researched appropriate products
Application
- ● Information is accurate and consistent
- ● All required documents provided
- ● Applied at optimal timing
- ● Clear purpose of funds articulated
- ● Submitted complete application
Post-Application
- ● Monitoring email/phone for requests
- ● Ready to respond within hours
- ● Additional documentation accessible
- ● Verification call prepared for
- ● Comparing offers received
Summary: The Approval Formula
Getting approved comes down to:
- ●Right Product: Match your profile to appropriate options
- ●Strong Presentation: Optimize metrics before applying
- ●Complete Application: No missing information or documents
- ●Quick Response: Be available and responsive
- ●Honest Communication: Address concerns proactively
The businesses that get approved most often aren't necessarily the strongest—they're the ones who understand what lenders want and present themselves accordingly.