Who's Really to Blame for Slow Bank Loans?

Unprepared borrowers are a primary culprit

By Amy Kassar

Ask any small-business owner to name his or her biggest gripe about obtaining a bank loan, and you will likely hear that it's the tortoise pace at which banks review and approve loan applications.  

Banks are notorious for their lengthy loan-application processes, which often take weeks to complete. Though the economy is in recovery mode,

the recession made a huge impact on how banks deal with small-business loans. Banks now require more from applicants and they are pickier about approvals.

In our loan-brokerage firm, we commonly hear from borrowers about issues with bank-loan processing times. When we dive deeper into the supposed issues, though, we often find that the borrower is more to blame for the lag than the bank.

Unprepared borrowers are a primary culprit. Business owners could speed up the process with a timely submission of their up-to-date financials and tax returns, as well as open communication with bank-loan officers. By contrast, owners with outdated financials or extensions on their tax returns, and who are poor communicators, will often suffer.

As a small-business owner myself, I understand how financials can fall by the wayside at times. We become so engrossed in the day-to-day operations of the company that reconciling our bank statements gets pushed further down the "to do" list.

However, if you are seeking a loan, staying current with your accounting, bookkeeping, profit and loss statements and balance sheet is one of the best ways to accelerate the bank-loan-application process -- while also relieving yourself and your loan officer of headaches.

Two tips for ensuring that you are up-to-date with your financials: Hire a part-time bookkeeper and put in more face time with your accountant. Hiring a bookkeeper even once a month makes it easier for you to reconcile your bank accounts and keep your balance sheets up to date. Additionally, meeting with your accountant quarterly instead of just once a year at tax season will help you create some checks and balances. This will also force you to be more disciplined with your record keeping and tax preparation.

Not only will these steps make you more appealing to potential loan brokers, but they will also help you maintain best business practices by knowing where your money is and where it is going. 

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