As a lender, you’ll probably encounter many entrepreneurs who need extra money to pursue their business ideas. It’s in your best interest and theirs to make the loan application process as easy as possible. If you develop a reputation for being a difficult lender to work with, many potential clients may go elsewhere.

On the other hand, if you make the loan application process simple, clients will likely flock to you. Here are six ways you can help clients secure the loans they need to pursue their entrepreneurial goals.
 

Income verification is an important safeguard when reviewing a loan application. You need to be able to see that an applicant makes as much as claimed. For inexperienced entrepreneurs, the process of verifying income may be confusing. You can simplify it by clearly explaining the types of documents you’ll accept for the purposes of verifying income.

Most lenders accept current pay stubs, the previous two years of tax returns, and the most recent bank statements. Some also accept letters of employment in rare circumstances when an applicant has recently switched jobs. If possible, avoid having more stringent documentation requirements than these when verifying income. Tell applicants why the above documents are necessary and how they help you minimize your risk when approving loans.
 

Besides verifying their income, loan applicants will need to do a few other things before they can get approved. Preparation is key to ensuring a smooth and quick loan approval process. You can help clients prepare by letting them know what to expect during the remaining loan application and processing steps.

Inform applicants about the different small business loan types you offer and how they differ from each other. Let them know you’ll review their financial background when determining whether to approve their loan. Some of the factors you’ll likely consider include credit score, cash flow, outstanding loans, and collateral. Outline each remaining step in the application and approval process so applicants have a clear picture of what to expect.
 

Some clients may be caught off guard by the amount of paperwork they need to provide for loan approval. You can help manage expectations by going over all of the required documents at the beginning. Remember that first-time entrepreneurs may not be familiar with the acronyms and slang lenders frequently use. Choose familiar words and provide detailed explanations that applicants are more likely to understand. 

Explain that the loan application must be filled out correctly and precisely to avoid processing delays. Give applicants notice that they’ll need to submit a detailed business plan explaining how they’ll use the loan. Finally, if you require additional documentation such as company ownership papers, make this known in advance.
 

Some borrowers are under the impression that their personal credit score and business credit score are completely separate. This is true in some ways but not in others. The business credit score stays with the business and the personal credit score stays with the individual. But the two are often interconnected. You can prepare borrowers for the loan approval outcome by explaining how personal credit scores can impact business loan applications.

Borrowers obtaining a business loan for the first time may need to use their personal credit score when applying. A low personal credit score is problematic when it comes to obtaining a small business loan. Borrowers should know that most lenders like to see a credit score above 700 because it indicates a low-risk client. Individuals with credit scores below 650 will have a challenging time securing an SBA loan with a good interest rate. Explain all of this to borrowers so they know exactly what to expect based on their credit score.
 

Many entrepreneurs are so excited to pursue their dreams that they can become too optimistic when applying for a loan. They may assume they can handle large loan payments they really can’t afford to repay within the stipulated time period.

Recommend that new business loan applicants use a business loan calculator to determine how much they can afford to borrow. Most lenders provide a complimentary Equated Monthly Installment (EMI) calculator to help borrowers determine their monthly loan payments. This type of calculator can help entrepreneurs determine how much they should ask for when applying for a loan. 
 

The small business loan process typically takes up to four days if all paperwork is correctly filled out. As a lender, your loan process may be a little shorter or longer than this. Let applicants know how long they will likely need to wait before they can receive their loan approval and funds. To keep borrowers happy, let them know what they can do to ensure a speedy disbursal process.

You may want to inform borrowers that any missing or incorrect information on the loan application will delay loan approval. Explain that lenders favor applicants who present a solid business plan. If you offer an online application process that typically results in faster approvals, let borrowers know.

The loan application and approval processes probably seem straightforward to you as a lender. But remember that most borrowers are nervous and unsure of what to expect. To keep your clients comfortable and at ease, be as helpful as you can. Clearly outline the steps involved with an SBA loan application and patiently answer any questions your clients may have. This will boost client confidence and help you develop a reputation as a cooperative and helpful lender.