How is that as a Commercial Financial Broker that specializes in small business loans that I can present the same loan to four lenders and get four different responses?. Three may hate the loan, one loves it and therefore funds the deal. Its all in the package they we present to the lender.

The answer clearly is THE LOAN PACKAGE

When an underwriter gets a loan package, they immediately make a determination if they want to work on this one or put it towards the end of their workload. This may be an oversimplification, but a professionally prepared and well presented package will be handled more expediently. That is not to say that a "good Looking package will guarantee approval, but it certainly will help.

An underwriter while viewing a loan package needs to get a true feel for the deal, they have certain questions and criterions that need to be met.

Each financial institution has a market niche, if your deal fits into their market niche they are more likely to take a serious look at your package. Therefore before you submit any loan to any bank try to find out what the Banks' niche market is.

The local branch manager will be delighted to share this information, all you need to do is just ask for it. Seriously, how can you prepare a loan submission, create a marketing plan, if you do not know the needs of the lender you are presenting the loan to,

Once you have a basic understanding of the lenders needs, you need to be able to answer questions like the following

Below are some of the important issues that are raised in the underwriters mind and the corresponding sections of the professionally prepared loan package.

A properly prepared package should answer the following inquiries by the review underwriter.

Does the business in question have a positive cash flow that is supported by historical documentation? This is answered by including the appropriate financial statements and tax returns. Typically the lender wants to see three years of the sellers tax returns.

Also the lender will definitely want to see an interim financial statement year to date. the lender when viewing the financial statement wants to see a gross income trend increasing not decreasing, if there is a decrease please include an explanation. By including an explanation before the lender asks for it you show the lender that you are aware of the issue.

Can the business support additional debt? This is answered by taking a comprehensive look at the current as well as the future cash flows. Also it can be determined by the sellers discretionary income at the end of the day.

Is the individual that is attempting to secure the loan qualified to run this business? This is answered by the inclusion of his current resume, as well as any supporting documentation. For an SBA (small business administration) loan of any sort this issue is crucial! If you do not have relevant and timely experience partner with someone who does.

Does the prospective purchaser have marketing and business plan to demonstrate knowledge of the business as well as their plans for repayment and future growth? Please do not hire someone to write you a market and or business plan. Its very clear to a lender when they see a canned presentation. Also why would you deny yourself that soul-searching that it takes to write a business plan.

The most important part of writing the business plan is not the final product, its the mental gyrations that you went through to get the final product. So please don't deny yourself this mind bending,`mind searching activity.

What are the projected revenues for the new business? Include a projected financial proforma with a complete explanation of all your assumptions. If you believe your assumptions will be questions also include your back up data that you used to draw out your conclusions.

What is the current financial situation of the borrower? A personal financial statement must be included, as well as a current credit report.

If a buyer of a business just walks into their local bank, and does not have an individual who knows and understands the process the loan will definitely take longer. But a professionally prepared package answers all the above questions that an underwriter needs to have handled and thus makes the time frame for approval and ultimately closing much faster.