questions to be asked for business loan

Top 9 Business Loan Questions help you secure a Small Business Loan

March 19, 2022 • 9758 views

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.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Business Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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