Borrowing Money

Information Needed for a Successful Loan Application

  1. Completed application
  2. Purpose of loan request, including complete details of property to be purchased, requested terms and collateral offered
  3. Past three years individual tax returns
  4. Past three years business tax returns
  5. Past three years financial statements
  6. Past three years tax returns of guarantors
  7. Aged accounts receivable
  8. Cash flow projections demonstrating ability to repay
  9. Breakdown of costs of project being financed
  10. If a commercial mortgage, a breakdown of operating expenses, copies of existing leases, etc.
  11. Interim Financial Statements
  12. W-2's for last three years, if applicable, including spouses
  13. Copies (front and back) of canceled checks for payment of existing mortgages, notes and other loans for past twelve months
  14. Copies of bank statements for past twelve months, including individual's, spouse's, business' and possibly those of guarantor's
  15. Most recent surveys and/or appraisals
  16. Copies of Professional Licenses Suggestion: Assemble the above applicable documentation in a notebook with a table of contents and subject dividers.

Potential Closing Costs

  1. Application fees
  2. Legal fees incurred by lender
  3. Legal fees incurred by borrower
  4. Accounting fees
  5. Environmental audit fees
  6. Title searches
  7. Points
  8. Appraisal fees, including real estate, new and used equipment
  9. Engineering fees
  10. Surveying fees
  11. Other costs, such as filing fees, federal express, credit reports

Beware of IRS Form 4506
Request For Copy of Tax Form

As a result of and in reaction to the fraud and other problems of the 1980's, lending institutions have recently required some applicants to sign IRS Form 4506, "Request for Copy of Tax Form." For a fee of $14.00 per year, the IRS will provide a copy of tax returns and/or W-2's filed. The lending institution then compares documents provided by the IRS and the borrower. Discrepancies could result in denial of loan to criminal fraud charges.


The herein-listed Documentation and Closing Costs are not all inclusive nor are all the listed items applicable to all borrowers. Borrowers should be aware of recent changes in the law, re: appraisals and the associated increase in fees. Economic conditions and federal policy are dynamic and ever changing, requiring the banks and other lending entities to react and change policy and requirements accordingly.