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Common Loan Mistakes and How to Avoid Them

Whether you’re expanding a home-based bakery into a storefront or buying new equipment for your growing salon, applying for a small business loan can feel both exciting and intimidating. While the extra capital can help you reach your goals faster, it’s also a commitment that requires careful planning and thorough preparation. 

“A lot of people think, ‘I just need the money, so I’m going to fill out the basics,’” says Janiece Stewart, Michigan Women Forward Loan Officer. “But not giving us complete or accurate information can really slow down — or even derail — the process.” 

Below are several pitfalls Stewart often sees, along with insights on how to avoid them so you can confidently move forward with your financing needs.

1. Incomplete or Omitted Information

One of the biggest stumbling blocks is simply leaving blank fields on the application. Whether it’s personal financial details, business revenue figures, or projected expenses, failing to provide everything requested can bring your loan process to a halt.

“We ask for the information for a reason,” Stewart explains. “Even if a question seems trivial, please fill it in. It helps us see the full picture of your business and identify areas where you might need extra support.”

How to Avoid It

2. Not Understanding Your Own Business Finances

You may be a master of your craft — whether it’s baking, consulting, or providing specialized services — but that doesn’t automatically mean you’re a pro at financial management. Many entrepreneurs struggle with reading financial statements, preparing accurate projections, or pinpointing every expense.

“At Michigan Women Forward, we want to see that you have a realistic handle on your revenue and costs,” Stewart notes. “If you expect to earn $100,000, we want to know how many products you’ll sell, what each costs to make, and the market channels you’re using. Break down every assumption.”

How to Avoid It

3. Rushing the Process Without a Clear Plan

Sometimes, entrepreneurs want funding immediately — yesterday, if possible. They may request a large sum for major expansion, like buying a significant amount of inventory, without ensuring they have the necessary financial underpinnings.

“You might be able to source and store the inventory, but if you haven’t thought through your cash flow, market demand, or other costs to operate, you could be jeopardizing the entire business,” Stewart cautions.

How to Avoid It

4. Providing Inconsistent or Inaccurate Details

Inconsistencies can range from honest typos and overlooked expenses to failing to mention a personal loan or debt. Because MWF delves deeply into your overall picture, missing or conflicting data inevitably raises red flags.

“We do ask some questions repeatedly, which helps us spot discrepancies. It’s not about catching you out — it’s about making sure we fully understand your situation,” Stewart says. 

How to Avoid It

5. Lack of Responsiveness During Underwriting

You’ve turned in your application — great! But if MWF (or any lender) follows up with questions and you’re impossible to reach, your application could linger indefinitely.

“We might request extra paperwork, like a lease agreement or a liquor license, depending on your business type,” Stewart explains. “If you don’t respond to emails or calls, you’re simply delaying your approval.”

How to Avoid It

6. Mistaking ‘Not Now’ for a Final ‘No’

Even if MWF or another lender decides you’re not currently in a position to take on a loan, that doesn’t mean the door is closed forever.

“If we can see that adding more debt right now would hurt your business, we’ll say ‘Not now’ and offer steps to improve your financial health,” Stewart explains. “We look at personal credit, too. If it’s under 600, we might advise enrolling in a credit restoration program while your loan is being underwritten.”

How to Avoid It

How MWF Can Help

Unlike traditional banks, Michigan Women Forward invests time in helping you build a sustainable enterprise. Loan officers like Stewart work closely with applicants, digging deeper into your numbers and your vision to ensure that funding truly benefits your bottom line.

A little preparation goes a long way. Before filling out that loan application, invest time in mapping your finances, creating a realistic business plan, and gathering all required documents. And remember, a “not now” isn’t necessarily a “no” forever — often, it’s an opportunity to refine your approach and come back stronger.

“Don’t be afraid of the loan process,” Stewart encourages. “There’s plenty of help available. With the right plan and the right resources, you can secure the funding you need to watch your business thrive.”