Stage 2: Pre-Qualification
Following the initial consultation, the lender sends the borrower a list of documents they’ll need to evaluate the loan. This is the first of two document rounds – the second comes later during closing.
The documents requested at this stage serve a specific purpose: they give the lender the information to assess the financial position of the borrower and business and the viability of the deal. The lender will use these documents for both their preliminary and full underwriting review, so completeness matters. For a more detailed breakdown of all documents involved in the B&I process, see our USDA B&I Loan Documents page.
Commonly Requested Documents
Every lender’s list is slightly different, but the core documents are consistent across most B&I loans. Here’s what borrowers can expect:
Personal
• 1040 Personal Tax Returns
Three years of personal federal tax returns with all schedules. The lender reviews these alongside the personal financial statement to understand the borrower’s income history, tax obligations, and overall personal financial picture.
• Personal Financial Statement
A current statement listing all personal assets (bank accounts, investments, real estate, vehicles) and liabilities (mortgages, car loans, credit card balances, other debts). This gives the lender a snapshot of the borrower’s net worth and personal financial capacity outside the business.
• Resume
A summary of the borrower’s professional background, focusing on business experience and industry-specific qualifications. The lender is evaluating whether the borrower has the skills and track record to operate the business successfully. This is particularly important for acquisition deals where the borrower may be new to the industry.
• Signed Credit Authorization
Written permission for the lender to pull the borrower’s personal credit report. This is standard for any commercial loan application.
• Government-Issued Photo ID
For identity verification purposes. Common options include a drivers license or passport.
Business
• Business Financials
The most substantial part of the initial request. Lenders typically ask for three years of business tax returns, three years of profit and loss statements, a year-to-date interim P&L, and the current balance sheet. Together, these paint a picture of the business’s revenue trajectory, profitability, and current financial position. For businesses less than three years old, the lender will work with whatever history is available.
• Business Entity Documents
The business’s formation documents – Articles of Incorporation, LLC Operating Agreement, Certificate of Partnership, or equivalent. These confirm the business is a legitimate legal entity and clarify the ownership structure, which matters for determining who needs to provide personal guarantees.
Conditionally Requested Documents
Beyond the standard list, some documents are only requested when they apply to the specific deal:
• Purchase and Sale Agreement
Required when the loan involves purchasing real estate or acquiring a business. The lender reviews the terms of the transaction being financed, including price, contingencies, and closing timeline.
• Affiliate Business Financials
If the borrower owns other businesses, the lender will want financial documents for each one – typically the same three years of tax returns, P&Ls, and current balance sheet. This ensures the lender understands the borrower’s full financial picture and any obligations that could affect repayment capacity.
• Lease(s)
Any active leases the business holds, whether for the premises, equipment, or other assets. Lease obligations factor into the lender’s cash flow analysis.
• Franchise Agreement
If the business operates as a franchise, the lender needs to review the franchise agreement to understand the terms, fees, territorial rights, and any restrictions that could affect the loan.
• Additional Collateral Documents
If the primary collateral doesn’t fully cover the loan amount, the lender may request documentation on supplemental collateral. Common forms include a life insurance policy or liens on equipment or personal real estate.
