LARA
A Message from Twyla Garrett
Founder & CEO • Your Partner in Financial Confidence
Video: Building Your Banking Confidence
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Loan Guidance
AI-powered references can demystify and improve your bank loan approval chances
What Major Underwriters Evaluate
Understanding what lenders look for helps you prepare a stronger loan application and improve your chances of approval.
Cash Flow & DSCR
Your ability to generate cash to service debt. Lenders require DSCR of 1.25+ (generating $1.25 for every $1 of debt).
Why it matters: Proves you can repay the loan without financial stress.
Credit History
Personal credit score (680+ for most loans, 750+ for best rates) and business credit history showing timely payments.
Why it matters: Demonstrates your reliability and trustworthiness with borrowed money.
Collateral & Assets
Assets that secure the loan (real estate, equipment, inventory). Lenders look for loan-to-value ratios of 70-80%.
Why it matters: Reduces lender risk and often results in better terms and rates.
Financial Statements
Clean, accurate P&L and Balance Sheets showing profitability, healthy ratios (Current Ratio 1.5+, Debt-to-Equity under 2.0).
Why it matters: Proves financial stability and sound business management.
Business Plan & Purpose
Clear explanation of how loan proceeds will be used and how the investment will generate returns.
Why it matters: Shows strategic thinking and increases lender confidence in loan success.
Time in Business
Most lenders require 2+ years in business. Startups face stricter requirements and may need SBA backing.
Why it matters: Track record reduces perceived risk and demonstrates business viability.
Key Insight: Lenders evaluate the "5 Cs of Credit" - Character (credit history), Capacity (cash flow), Capital (equity investment), Collateral (assets), and Conditions (economic factors). Strong performance across all areas significantly improves approval odds.
How to Establish Business Credit
Building business credit separates your personal and business finances, improves loan terms, and increases borrowing capacity.
Step 1: Get Your Legal Foundation
- • Register your business as an LLC, Corporation, or Partnership
- • Obtain an EIN (Employer Identification Number) from the IRS
- • Open a business bank account in your company's name
- • Get a business phone number listed in 411 directory
Step 2: Register with Credit Bureaus
Step 3: Establish Trade Lines
Work with vendors that report to credit bureaus:
- • Uline, Quill, Grainger (office supplies & equipment)
- • Net 30 accounts with vendors
- • Business credit cards (Capital One, American Express)
- • Pay invoices on time - 30+ days builds credit history
Step 4: Monitor & Build Your Score
Track your business credit progress:
Free monitoring:
→ Nav.com (Free business credit scores)Credit management:
→ CreditStrong Business (Credit building)How to Improve Your Personal Credit Score
Your personal credit score heavily influences business loan approval, especially for small businesses and startups.
Quick Wins (30-60 Days)
- Pay down credit card balances
Get utilization below 30% (ideally under 10%)
- Become an authorized user
On someone's old account with good history
- Request credit limit increases
Lower utilization without paying down debt
- Dispute credit report errors
Check all 3 bureaus and file disputes
Long-Term Strategy (6-12 Months)
- Set up autopay
Never miss a payment (35% of score)
- Keep old accounts open
Length of credit history matters (15%)
- Diversify credit types
Mix of cards, loans, mortgage (10%)
- Limit hard inquiries
Space out credit applications by 6+ months
Free Credit Resources
Pro Tip: If you have collections or charge-offs, negotiate "pay for delete" agreements. Many creditors will remove negative items in exchange for payment. Get it in writing before paying.
SBA Form 413 - Personal Financial Statement
Required for most SBA loans. This form details your personal net worth and is critical for loan approval.
| Section | What to Include | Why It Matters |
|---|---|---|
| Assets | Cash, savings, investments, real estate, vehicles, retirement accounts, business ownership value | Shows your financial strength and liquidity for loan repayment |
| Liabilities | Mortgages, auto loans, credit cards, student loans, personal loans, business debts | Reveals existing debt obligations and debt-to-income ratio |
| Net Worth | Total Assets minus Total Liabilities | Primary indicator of personal financial health; lenders prefer positive net worth |
| Income Sources | Salary, business income, rental income, investments, other sources | Demonstrates repayment capacity beyond business cash flow |
| Contingent Liabilities | Cosigned loans, guarantees, legal claims, pending lawsuits | Hidden risks that could affect loan repayment ability |
Key Ratios Lenders Calculate
- • Debt-to-Asset Ratio: Should be under 40%
- • Liquidity Ratio: Cash/near-cash assets to cover 3-6 months expenses
- • Net Worth to Loan Amount: Typically need net worth ≥ loan amount
Common Mistakes to Avoid
- • ❌ Inflating asset values (lenders verify)
- • ❌ Omitting liabilities (credit reports reveal all)
- • ❌ Not updating for major changes
- • ❌ Messy handwriting (type it professionally)
Download Official SBA Form 413
→ SBA.gov/document/sba-form-413You can also use our Personal Wealth Calculator below to prepare this information digitally and generate a formatted version.
Personal Wealth Calculator
Calculate your net worth for loan applications
Assets
Liabilities
AI will extract your debts automatically
Your Personal Net Worth
$0
Debt-to-Asset Ratio: 0%
Lenders prefer:
- • Positive net worth
- • Debt-to-Asset < 40%
- • Liquid assets available