How it works
LoanPrep looks at your business the way a commercial lender's credit analyst would, then tells you what they'd see.
What you'll need
Have these ready as PDFs, photos, or Word, Excel or CSV files.
- The business's tax returns for the last two years. A new business with no full year of returns yet enters what it expects for its first year instead. Buying a business? Use the seller's returns for the business you're buying.
- Personal tax returns for the last two years for each owner with 20% or more of the business.
- A year-to-date profit and loss statement and balance sheet, if your last tax year ended a while ago.
- A list of the business's loans, lines of credit and leases. If you don't have one, fill it in here.
- A personal financial statement for each owner with 20% or more: what they own and what they owe. Married owners give one together. If they don't have one, they fill it in here.
- For a purchase, the price and how much you plan to put down.
Rather not upload your tax returns? You can type in just the lines we need instead, and we'll show you where each one is on the form. A lender will still want the full returns, so the closest match to a real review comes from your documents.
Last year's return not filed yet? Type that year in from the business's year-end profit and loss statement and each owner's W-2s, and we'll estimate the owners' taxes from their latest filed returns.
What we check
Whether your cash flow covers the payments
Lenders want the business's cash flow to cover every loan payment, the ones you have now and the new one, with room to spare. Most look for at least 1.25 times the payments on a conventional loan. SBA loans need at least 1.15 times, or 1.25 times when a 7(a) loan buys a business or a co-owner's share. We check your latest year and the year before, because most lenders want two good years.
The owners, too
Owners with 20% or more usually guarantee the loan, so lenders look at them as well. We add each owner's personal income, take out their personal debts and an allowance for living costs, and test the business and the owners together. That's the figure a lender calls global cash flow.
Room for maintenance and repairs
Lenders set money aside each year to keep equipment and property working, called MCAPEX, and estimate it from depreciation: your latest two years added up and divided by two, leaving out buildings. We take that out of your cash flow and test your coverage again, so you can see how much room you really have. If one year's depreciation is much higher than usual, we point it out, because a lender will ask why.
Cash to close, and what's left after
We add up your down payment and the closing costs you pay, and show the cash you and the business would have left once the loan closes. Typical down payments are about 20% for a conventional real estate loan and 10% for SBA 7(a) or 504. A 504 for a start-up or a special-purpose property needs 15%, or 20% if it's both.
Rate and payment
We estimate lines of credit at today's Prime rate plus 2% and other loans at today's 10-year Treasury rate plus 2%. For an SBA 504, the CDC's share uses the latest published 504 rate. Your lender's quote will differ, but these are close enough to plan around.
Closing costs
Each loan gets an itemized estimate, like the appraisal, environmental report, title, legal fees and the SBA's guarantee fee where it applies. You can change any line, and choose whether to pay costs at closing or add them to the loan.
SBA eligibility
For SBA 7(a) and 504, a short set of yes-or-no questions checks the basics: the type and size of the business, how much of a building you'll use, and the rules every owner has to meet. You'll see "likely eligible" or "likely not eligible, because…". The lender makes the final call.
The questions a lender will ask
We flag what an analyst would circle: a drop in revenue, a loss year, distributions larger than earnings, one customer making up a large share of sales, a balance sheet that doesn't balance, statements that are out of date, and more. Each one comes with the question you should be ready to answer.
What your grade means
Your numbers meet common lender minimums for both years, and nothing big is left to explain.
Cash flow covers the payments, but a year falls short of the usual minimum, coverage after maintenance and repairs is tight, or a lender will have questions.
Cash flow doesn't cover the payments in one of the two years, or something else would likely stop the loan. Your plan shows what to fix.
You can download your results as a report to keep or send. See the sample report for a made-up bakery graded Close.
What LoanPrep doesn't do
- It doesn't check your credit.
- It doesn't apply for a loan or send anything to a lender. What you do with your results is up to you.
- It isn't an approval. Every lender has its own policy and makes its own decision.
See your own numbers
Start with what you have. Your results list anything a lender would still need.
Start my check