Business Loans: 5 Questions A Lender Will Ask You
When approaching a lender, be prepared to answer a number of questions that will determine whether you will get the funding you need.
Here are some common questions to prepare for.
How much money do you need?
Note that the question asks how much you need, not how much you want. Lenders will want you to have a detailed business plan and know exactly how much you will need to borrow in order to meet your financing needs and repay the loan.
How is your credit profile?
This is an essential question because your business and personal credit profile are primary determinants on whether you will qualify for a business loan.
How will you use the loan?
Lenders ask this question because they want assurance that you will be using the loan proceeds in a way that will enable your business to repay the loan. It is not enough to tell the lender that you will use the loan to purchase an asset; rather, lenders will want to know how purchasing said asset will help your business grow.
How will you repay the loan?
Lenders will want to know as much as possible about your ability to pay back the loan. Even if your business plan outlines how the loan would help your business grow, lenders will want more assurance. They will want to look at your business’ financial health and see that you have enough savings, assets, and personal collateral to still be able to repay the loan even in the worst-case scenarios.
Can you put up collateral/a personal guarantee?
Pledging assets as collateral provides lenders greater assurance that the loan will be repaid. Some lenders may not ask for collateral but instead ask for a personal guarantee, in which you will be personally responsible for the debt if you default on a loan.
Accel Business Funding has many different funding options for all businesses and funded many businesses for more than $380 million. When banks say NO, we say YES to funding in 24 hours!