One of the most important steps to avail a business loan is facing the interview with the lender.  Once you fill up the loan application form, submitted those pile of documents, you are proved eligible for the loan, now it is just an in-person interview that you are to crack to avail your business loan. In many of the unfortunate cases, a business loan application gets rejected just because the loan applicant could not satisfy the lender.

Facing an interview with the lender is a part of business loan processing. The interview is a way to ensure that the loan applicant is a worthy candidate to lend money. During a business loan interview, the loan applicant should try their best to prove three things. Firstly, your business has the financial stability, hence you are capable of paying the debt even if any unexpected happenings occur. Secondly, you are to prove that your business has a successful track record of cash flow. Thirdly, the collateral which you are putting upfront is valuable enough to refund the loan amount during the worst condition of your business.

Here we have sorted some of the very common questions asked when applying for a loan. This article will give you an insight on how to face those question and what the lender is expecting.

Top 5 Business Loan Questions to Prepare for

What is Your Business Plan?

The first expected question from a lender you may receive is about your business plan. This question is asked to you as the lender is interested in knowing the use of the borrowed amount. The right use of money has a higher potential to earn a better profit. Your lender is interested in the profit of your business as the proper cash flow is one of the most important components to ensure the regular payment of loan EMIs.

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How Much Money Do You Need?

The amount of money needed for a loan must justify the need for money. This question needs a careful answer as the correct estimation of money shows the maturity of the entrepreneur. When you ask for an amount which is just right as per your business need, the lender takes it as one of the positive points of a loan applicant. One must be able to show the breakdown of the use of money at every stage of your business development.

What is Your Business Loan Collateral?

The loan collateral is a must-have component of a business. The loan amount you will receive depends a lot on the loan collateral and its value. Most of the times, a maximum of 60% to 70% market value of the collateral can be availed as a business loan. Before opting a business loan check your business loan EMI. It helps you to plan your finance in a better way. A question on the collateral and the market value of the same is asked by every lender. The loan applicant must present their loan collateral in such a way that the lender builds a faith that even if the business faces a loss, the loan amount can be recovered by selling the collateral.

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Does Your Business Have the Ability to Repay the Loan?

This is the next question which you can expect from a lender. Though you may submit the past records of your business, the lender can ask you the same question just to be assured of the potentialities of your business in the coming days. If you see from the lender’s perspective, the loan repayment is the biggest concern. A business loan is a credit of a quite big amount and the risk of NPA is also high. Taking all those points into consideration, you can expect this question from the lender.

What is Your Personal Credit Status?

A personal credit status includes the credit score of the loan applicant, the credit history, the financial liabilities such as home loan, vehicle loan( if any), the investments, the credit card information etc. If your business is a joint venture, then every partner of the business has to explain their personal financial status if asked by the lender. The personal credit information is gathered and evaluated just to check if the borrower is disciplined with their credit payments.

Tips to Handle the Business Interview Successfully

The explained above are the most asked 5 question of a business loan interview. A business loan lender may ask you questions beyond the mentioned ones. The key to getting success in a business loan interview is being confident in yourself and in your business. Here are some additional tips to handle the business interview successfully

  • You must know your business plan well. Any question on your business should be answered promptly so that the lender can build a trust on you and your business.
  • You are to be equipped with relevant documents on hand while facing the interviewer. Try your best that most of your answers have a supporting document with you. Your set of documents should include visuals such as pictures and videos of your business, products, inventory etc.
  • Practice a mock interview with your business partner or anyone else who holds an idea on business loans. Practicing interviews in this way will make you confident while facing the real interview.
  • The last tip of the day is to be confident. The confidence on any matter comes when you have enough of preparation and your mind is calm. It is also advised to take enough rest so that your brain becomes active while facing the interview. Being well dressed and presentable also matters when it comes to being confident during your interview.

The Bottom Line

Getting a positive response to your business loan application is not a cakewalk. One needs to give their best to get business funding through a bank loan. Among many other preparations, getting ready for the loan interview is an important one. It is advised to prepare well so that this last step of a successful business loan can be bridged easily.