As tax deadlines approach, many business owners find themselves filing extensions to allow extra time for accurate financial reporting. Banks understand that finalizing taxes takes time and are generally accepting of delayed filings—but they require proper documentation to proceed with loan applications. If you’re planning to apply for financing after the deadline but before filing your tax return, being prepared with the right paperwork is crucial to avoid unnecessary delays.

The importance of tax filing extensions in loan applications

One of the first things lenders will request is proof that your tax extension has been properly filed. Since tax returns serve as a key factor in assessing financial health, banks need to ensure that your extension is on record before moving forward with an application.

To satisfy this requirement, be sure to have the appropriate extension forms readily available:

• For businesses: Form 7004 – Application for Automatic Extension of Time to File Business Tax Return
• For personal taxes: Form 4868 – Application for Automatic Extension of Time to File U.S. Individual Income Tax Return

Your CPA will typically file these forms on your behalf, so it’s a good idea to request a copy and keep it in your records.

Additionally, some lenders may require proof that the IRS has acknowledged and accepted your extension. In such cases, you can provide:

• A printout from the IRS portal showing the filing status and extension acceptance.
• For personal filings: Form 9325 – Acknowledgment and General Information for Electronic Filing.

Having these documents ready ensures that your loan application isn’t delayed due to missing paperwork.

Proof of payment: a critical factor

When filing an extension, your CPA will estimate the taxes owed and submit the extension along with a payment to the IRS. This step is not optional—it’s a standard requirement for all businesses.

Many lenders will ask for proof that this tax payment was made to confirm that no outstanding IRS liabilities exist. Without this, banks may hesitate to approve financing due to potential tax burdens.

To meet this requirement, you should have the following on hand:

• IRS payment receipt – The amount should match the estimate reported on your extension.
• Bank statement – Showing the payment has successfully cleared from your account.
• Credit card statement – If the payment was made via credit card, a statement confirming the transaction.

Being proactive about gathering these documents will help streamline the loan approval process and prevent unnecessary back-and-forth with lenders.

Updated financial statements: a necessity for lenders

Even if you’ve filed an extension, banks will still require an updated picture of your financial standing. Since tax returns are often over 15 months old by the time they are reviewed, lenders may ask for recent financial statements to assess your current business performance.

Be prepared to provide:

• Profit & Loss Statement (P&L) – A breakdown of revenue and expenses for the year ending 2024.
• Balance Sheet – A snapshot of assets, liabilities, and equity as of year-end 2024.

Lenders use these documents to gauge your company’s financial stability right now rather than relying solely on past tax filings. Having up-to-date statements readily available can significantly speed up the approval process.

Final thoughts

Filing a tax extension doesn’t have to be a roadblock to securing business financing—as long as you have the right documentation in place. Banks are willing to work with businesses that need extra time, but they require proof that your extension is filed, taxes are paid, and financial statements are up to date.

By proactively gathering these documents, business owners can avoid delays, strengthen their loan applications, and ensure a smoother funding process.

As tax season unfolds, preparation is key. Whether you’re seeking financing now or planning ahead, staying organized with these essential records will help you secure the capital needed to keep your business moving forward.

Thanks to Avrohom E. Barzeski from Fundi for helping us put together this post.

If you have any questions about this post or want help getting approval for business loans, feel free to reach out at [email protected].