How to Prepare for Underwriting: Documents & Tips to Speed Your Term Loan Approval

Whether you’re expanding operations, purchasing equipment, or strengthening cash flow, applying for a small business loan is an exciting step toward growth. But between submitting your application and receiving funds lies a crucial step that can make or break your approval timeline: underwriting.

At its core, underwriting is how lenders assess the risk and readiness of your business to take on a loan. It may sound intimidating, but understanding what’s involved (and preparing the right business loan documents ahead of time) can help you move through the underwriting process quickly and confidently.

Below, we’ll break down what underwriters look for, which documents you’ll need, and simple steps to speed up your term loan  process

What Is the Underwriting Process?

The underwriting process is the detailed review that determines whether your business qualifies for funding and under what terms. Underwriters evaluate factors like your credit history, cash flow, financial statements, and overall business health to ensure the loan makes sense for both parties.

If you’ve already read our post How Does Underwriting Work?, you know that this step typically follows initial application review and verification. Underwriters take a deep dive into your business’s financial picture and analyze the data to assess repayment ability and risk level.

Think of underwriting as a due diligence check. It’s not meant to trip you up, it’s meant to confirm that your business is ready for financing, can repay the loan and that the loan terms offered are a good fit.

Why Underwriting Matters for Term Loan Approval

When applying for a term loan, underwriting plays a direct role in how fast and favorably your application is approved. The process verifies that your business has stable cash flow and a reliable repayment plan. Strong documentation and clear financials can significantly increase your chance of term loan approval and help secure better rates and terms.

On the other hand, missing or incomplete information can delay decisions, especially if underwriters must follow up for clarifications or additional paperwork.

That’s why preparation is key. By having your business loan documents ready to go before you apply, you make the underwriter’s job easier and you’ll receive your decision sooner.

Essential Business Loan Documents You’ll Need

Every lender may have slightly different requirements, but most will ask for a core set of business loan documents to complete the underwriting process. These provide a snapshot of your company’s financial health, ownership, and operations.

Here’s what you’ll typically need to prepare:

1. Business Financial Statements

This includes your profit and loss statement, balance sheet, and cash flow statement usually for the last two to three years. These documents show whether your business generates consistent revenue, manages expenses effectively, and maintains liquidity. AOF doesn’t require these documents for loan approval, however some lenders may, so it’s best to be prepared.

2. Business and Personal Tax Returns

Most lenders will request at least two years of both business and personal tax returns. These confirm your income and help validate the information on your financial statements.

3. Bank Statements

Usually, the last three to six months of business bank statements are required. They help underwriters verify cash flow patterns, deposits, and expenses, as well as your ability to maintain reserves for loan repayment.

4. Debt Schedule

If your business has other loans or lines of credit, this document outlines each debt’s balance, monthly payment, and interest rate. Underwriters use it to assess your total debt obligations and calculate your debt service coverage ratio (DSCR).

5. Business License and Legal Documents

Include your business license, articles of incorporation, and any operating agreements. These confirm your ownership structure and ensure your business is in good standing.

6. Business Plan or Use of Funds Statement

Underwriters want to see a clear explanation of how you’ll use the loan proceeds and how the investment will strengthen your business. . This is also a good place to craft a loan repayment plan: How will you allocate your finances to repay the loan on time every month? This shows foresight, planning, and accountability.

Tips to Speed Up the Underwriting Process

Once you’ve gathered your documents, there are several steps you can take to streamline the process and move toward faster term loan approval.

1. Double-check your documentation

Ensure all documents are complete, signed, and up to date. Missing pages, mismatched numbers, or unsigned forms can stall underwriting for days or even weeks.

2. Stay responsive

Be ready to answer follow-up questions or provide additional information quickly. The faster you respond, the faster your application moves forward.

3. Clarify your financial story

If there are inconsistencies or unusual transactions in your statements, address them upfront. A short-written explanation can help underwriters understand your business context and avoid unnecessary back-and-forth.

4. Keep business and personal finances separate

Maintaining separate bank accounts and financial records for your business makes the review process smoother and establishes your business’s credibility.

5. Review your credit reports

Before you apply, check both your business and personal credit reports for errors. Correcting inaccuracies can prevent surprises during underwriting.

6. Work with lenders who know small businesses

At AOF underwriting team specializes in small business loan underwriting, so we know what it takes to assess and support growing businesses.

Underwriting success often comes down to how well you understand your financial readiness. If you’re looking to strengthen your business skills or improve how you prepare financial documentation, explore our Personalized Learning Resources, free tools and training from AO Fund designed to help small business owners build confidence and readiness before applying for a loan.

Common Reasons for Underwriting Delays

Even with preparation, some applications take longer than others. Understanding common slowdowns can help you avoid them:

• Incomplete or missing documents
• Unclear financial statements or discrepancies
• Outdated tax returns
• Lack of clarity on loan purpose or repayment plan
• Delays in communication between borrower and lender

If you’re unsure which business loan documents are required, you can use AOF’s Borrower Checklist to stay organized and confident.

Setting Realistic Expectations for Term Loan Approval

While many lenders can pre-qualify you in a few days, the full-term loan approval process (including underwriting) typically takes one to three weeks, depending on your business’s complexity and document readiness.

The good news? You can significantly shorten that timeline by submitting a complete, accurate application and working proactively with your lender’s team.

At AOF, we’re committed to making small business loan underwriting transparent and efficient. Our goal is to help you move from “application received” to “funds deposited” as quickly and confidently as possible.

The Bottom Line

Preparing for underwriting doesn’t have to feel overwhelming. By understanding the underwriting process, gathering your business loan documents early, and staying responsive throughout review, you can set your application up for success.

With the right preparation, you’ll not only speed your term loan approval, you’ll demonstrate to underwriters that your business is organized, capable, and ready to grow.