Business Loan questions have been constantly surfing the internet for a long time. Several curious souls google Business Loan questions to figure out their queries, especially while applying for a Business Loan. As a borrower, you can apply for various Business Loans, such as a small business loan. A Small Business Loan can be used for various business needs, such as purchasing raw materials, expanding your premises, and paying staff wages. In this blog, we will learn about the top 9 Business Loan questions that can help you secure a loan. Read on!
9 Useful Business Loan Questions
1. What is Your Business Plan?
This
is most arguably the first question that comes to the mind of
lenders when you apply for a Business Loan. The approval for
your Business Loan depends on your
business plan, making it imperative to devise a robust business plan
when applying for a loan. As a business owner, you should focus on
your expansion plans and contingency measures. This can help lenders
understand your vision, increasing the probability of loan approval.
You can consider social, economic, and political factors to create a
concrete business plan.
2. What are The Administrative Details of Your
Business?
The lender may also be interested in the
administrative details of your business. When applying for a
Business Loan, be sure to include important details about your
business, such as whether you're the sole proprietor or have
multiple partners, the number of employees, the hierarchy of your
organisation, etc.
In addition, providing other important
details like the positions of essential persons can also help
prevent identity fraud and unauthorised access to your business
capital. By verifying your business credentials, you can be listed
as a trusted applicant. In this way, your lenders will be assured
that the funds are being used appropriately.
3. How Long Have You Been in Business?
Different lending institutions have varying eligibility criteria
for a Business Loan. In most cases when you are applying for a
Business Loan from leading financial institutions, lenders consider
your business vintage as one of the prime eligibility factors for
approving the loan.
It is recommended to have a minimum of 3-5
years of business experience to be guaranteed a Business Loan
approval. Generally, those who have been running a business for a
longer period have better chances of approval compared to those who
have just started a business.
4. What are the Products or Services That Your
Business Sells?
When applying for a Small
Business Loan, it is important to provide information on the
products or services your business sells. Lenders use this information
to identify the nature of your business and determine if it is
suitable for a loan.
Some lenders may also ask for
industry-specific information to make a more informed lending
decision, especially for those lenders that offer an industry-specific
Business Loan. Hence, this Business Loan question is crucial as it
helps lenders assess the risk involved in lending.
5. How Much Money Do You Need?
Another critical Business Loan question frequently asked by lenders
is how much funding you require. While this question may seem
straightforward, many business owners struggle to provide a detailed
answer as to why they need the loan amount. In these situations, it is
significant for you to demonstrate fiscal awareness.
To deal with
such a question, you should provide a correct estimation of the funds
required and prepare a presentation that shows the breakdown of the
money needed at different stages of your business. This clear
understanding of your financial needs can help lenders make an
informed decision and increase your chances of loan approval.
6. How Do You Plan to Use the Money?
Besides communicating the amount of finance you require, it is
also important to let your lender know the funds. This information
can help the lender determine whether the loan is necessary and
whether the business owner has a clear plan for using the
money.
To increase your chances of approval, prepare well for
this Business Loan question and be ready to explain how you plan to
use every rupee of your loan amount. Additionally, you should also
justify your reasons for asking for the loan amount. This will help
to demonstrate your financial responsibility and increase your
chances of loan approval.
ALSO READ :- 6 Possible Ways To Lower Your Business Loan Interest Rate
7. What is Your Credit Profile?
When evaluating a Business Loan application, lenders often ask
about your credit history, including your credit score, existing
debts, credit utilisation ratio, and the age of your first credit.
Asking these questions helps to assess your creditworthiness.
The answers to these questions can significantly influence the
lender's decision to approve or disapprove your loan application.
Therefore, it is recommended to provide answers that reflect your
business's sound financial health and creditworthiness.
In case
you have a poor credit score, limiting your credit utilisation ratio
and repaying your loans earlier can help to improve your creditworthiness.
8. How Do You Plan to Repay Your Loan?
Another common Business Loan question that your lender can ask is
when will it be suitable for you to repay the loan amount. Here, some
lenders may give you the flexibility to choose a repayment plan that
best suits your financial requirements. However, in other cases, you
can also face a tight repayment period depending on the loan amount,
your creditworthiness and the lender.
Borrowers should understand
that missing a payment date can negatively impact their credit score. So, they
should first assess their capability to repay before availing a
Business Loan. Moreover, lenders may assess your borrowing behaviour
to confirm if you are a risky applicant or not. Hence, make sure to
clearly state your repayment plans at the earliest while applying for
a loan.
9. What is Your Average Monthly Revenue?
When applying for a
Business Loan, your lenders consider your average monthly
revenue. They prefer to see a consistent and stable revenue stream
to ensure the borrower's ability to repay the loan. While there is no
specific benchmark, lenders may look for a minimum average monthly
revenue ranging from around ?50,000 to ?1 Lakh or more.
However,
it is important to note that different lenders have different
criteria, and some allow flexible repayment options. It is still
advisable to check with your lenders or financial institutions to
understand their specific requirements for Small Business Loan
applications in terms of monthly revenue.
How to Apply for a Small Business Loan Online?
Applying for a Small Business Loan is quick and simple. Follow the 3 simple steps to apply for a Small Business Loan within 5 minutes:
- Step 1: Click on the “Apply Now” button and you will be taken to the application form.
- Step 2: Provide all the basic details such as your name, DOB, PAN number, email ID, etc to fill out the application form.
- Step 3: Attach all the required documents and click on the “Submit” button to complete the application process.
The loan amount will be instantly disbursed to your account upon successful verification of the attached documents.
To Conclude
The chances of your loan approval are heavily influenced by how well you handle the common Business Loan questions from your lender. Your answers should be detailed, innovative, and specific. It is important to read, research, prepare, and plan, the better your chances of enjoying financial flexibility with a Small Business Loan.
