If your business is ready for the big leap, a business loan is a perfect place to begin. The funding from a business loan can be used to expand into new territories, hire new talent, furnish company capital, build marketing tools, and so much more. Leading financial institutions offer business loans through convenient processes. While you can furnish the essential documents, a business loan also requires you to go through an in-person interview. The last step in the loan approval process, this interview can determine the successful approval of your loan.
The in-person interview with the lender is an important part of the business loan process. The lender evaluates the creditworthiness of a borrower while gauging the growth potential of the business. Lenders typically pose different questions and consider how well a borrower can answer these.
Read this curated list of questions that lenders usually ask during the interview:
What is your business loan requirement?
Lenders want you to give them a reasoned request for a business loan. It is important that you give careful consideration to this question as you’ll have to explain your rationale for it. This answer will also demonstrate your plans with the funding. When the requested amount seems within reason, it helps your application.
Have you laid out a business plan?
Lenders want to know how you plan to use the money. A well-drafted business plan is likely to result in higher profits. It’s all about the cash flow. To put it in another way, you must have a strategy for enterprise growth. A good financial plan will put your lender in a better position to loan.
What are you presenting in the form of loan collateral?
The interest you pay against the loan depends on the collateral that is fixed. Typically, the lender offers you about 70% of the market value of the collateral in the form of a business loan. Hence, you must prove the worthiness of the asset to borrow. It could be anything from company possessions, land, or a personal asset. You must bring supporting documents that can be used as proof of collateral. Briefly, the asset must be convincing to lenders that even if you cannot repay the loan, it can be used to recover the amount.
How will you successfully repay the loan?
A lender only offers you a business loan after being convinced about your ability to repay the funds in time. Business loans are big amounts and unrecovered dues can be a major loss for the institution. While you may have already submitted records of the business profits and future growth plans, the lender needs additional reassurance. Answer with conviction about how you can afford the EMIs and how growth will further service the same.
Do you have a good credit status?
The bank evaluates the credit status of the entrepreneur when sanctioning a business loan. The credit status gives the lender a closer view of your credit score and credit history. It also helps the lender understand any financial liabilities that you may have and the way you handle these. A lender will ask you this question to evaluate what you have to say about your credit status. If your business includes more stakeholders, the bank will expect a financial status review of each of the individuals. All the information is gathered to ultimately summarize how well the borrower or borrowers handle the new loan.
Tips to crack the business loan interview
The interview may include, but is not limited to, the above-listed questions. The key is to be confident about your business plan and be honest and easygoing at the interview. Some tips to follow:
● Practice answering these questions in the form of a mock interview. This will help you develop the patience to keep calm throughout the process.
● Carry all the relevant documents. Supporting documents can help convince the lender about your seriousness as an entrepreneur.
● Maintain your composure. If you think that you are unable to answer a certain question, reassure the lender that you will come up with the response within an estimated period.
A business loan can successfully push your entrepreneurial endeavours to greater heights. However, receiving an approved business loan is no easy feat. It demands considerable effort and the ability to prove the worthiness of your business. A lender must be convinced about your ability to successfully repay the loan at the end of the tenure. So, you must be prepared with the right sources and being able to crack the loan interview is one. Contact lendingkart customer care to know more details.
Carefully evaluate your business structure and prepare for the above questions to successfully bag your business loan. Next step? Visit Bajaj Finserv MARKETS to avail business loan offers from leading financial institutions at affordable terms.