Applied for a small business line of credit last month. Underwriter came back asking for "proof of active operations" beyond what I already submitted. I run a small landscaping company, been at it for six years. They want things like signed contracts, invoices, bank statements showing customer deposits, photos of equipment, maybe a license. I sent tax returns and a P&L already. What else do they typically want? Anyone dealt with this?
Banking
The banker asked me to prove my business was actually operating
Six years and they're still asking? That seems like a lot. What kind of bank is this, a big national one or a local credit union?
Signed contracts and invoices are the big ones. Tax returns show income but they wadnt to see the actual paper trail. Pull together a few months of invoices with matching bank deposits.
I had to do this last year. They wanted my business license, a couple of recent client invoices, and bank statements. Also a letter from my accountant confirming the business is active. That last one seemed to satisfy them.
Banker here. Not going to get into specifics but 'proof of active operations' usually means they need to see transactions that aren't just transfers between your own accounts. Customer deposits with matching invoices, signed contracts, that sort of thing. Photos of equipment are helpful but secondary. If you're a sole proprietor without a separate business bank account, that can complicate things.
Do you have a business bank account separate from personal? That made a difference for me.
Yeah separrate account since year one. I can pull invoices but some of my clients pay in cash. Not sure how to document that cleanly.
Cash deposits with a corresponding receipt log and invoice numbers is what I'd suggest. Even a simple spreadsheet helps. Also, if you have any commercial clients who pay by check or ACH, those are the strongest examples. Lead with those.
Cash is fine as long as it hits the bank account. They're looking For consistency, not perfection. Three to six months of statements should do it.
Second the accountant letter. Mine was short, just said I'm an active client and the business files taxes. Cost me $50 and saved me a week of back and forth.
Is this normal for a line of credit? I've only ever gotten equipment loans and they didn't ask for this much.
It's been getting more common since 2020. Banks tightened up. Dont take it personally.
Also depends on loan size and whether it's SBA-backed. SBA lenders have specific documentation requirements. If yours is SBA, ask the banker for the checklist directly so you're not guessing.
It's not SBA, just a regular line. I'll try the invoices plus a few months of statements and see what happens. Thanks for the input.
If they push back again, ask for the specific reason in writing. Sometimes it's just one document they're missing and they don't communicate it well.