Whether you are running an existing business or starting a new business, finances are a huge part of your success. In the case you need business financing, either short term or long term, I have outlined some tips to help secure the financing you need. When you approach a lender consider the business loan interview as similar to a job interview. Do your research and find out all you can about the lender. Also, make sure you have with you all the information the lender might ask for. Keep in mind that the question foremost in the lender’s mind will be, “How likely is this person to pay back the money lent?” You need to provide an affirmative answer to that question to nail the loan interview and get the finances you need. Here are some tips that will help you navigate the financing process.
Scout Around for the Best Source of Finance
As you begin preparing for the business loan interview, you should look at the sources where you can put in your application. Your best bet is to start with the bank with which you already have a relationship. When you have an account with a particular bank and have been conducting transactions for a while, it is more likely to trust in you and your ability to honor your commitments. If you don’t have a bank account, open one with a bank that supports small businesses.
Know Your Credit Scores
Request for a copy of your personal credit report from one of the three credit reporting agencies. If your company has a distinct identity and has been in operation for a while, you could request a credit report for the company also. Study the reports carefully and check for any possible errors that can lower your scores. If needed, take steps to correct any credit discrepancies to raise your chances of getting the finances you need at favorable interest rates and other terms and conditions. Having detailed information about your credit scores can help you prepare better for your business loan interview.
Gather Relevant Information
Do your homework about the lender to ensure you are getting a loan with a lender who has your businesses best interest in mind. Find out what types of documentation the lender is likely to ask for and prepare them carefully.
The following documents are typically requested by lenders:
- Business plan with complete details
- Tax returns for the past couple of years
- Accounts receivable and accounts payable
- Existing business debt and the repayment schedule
- Financial statements along with the future operating plan
- Personal financial statements and tax returns
- Collateral you’re offering
- Terms of repayment you have in mind
- Your designation in the company
- Physical address of the business
- Your social security number and proof of identity
In addition to these documents, prepare any additional documents that may help obtain financing for your business. For instance, any documents showing you’ve paid off any credit cards or loans recently, bring proof of the payments. The payments you make towards clearing your dues may not show up on your credit report right away and the scores might not go up immediately. If you have recently corrected errors, the institutions involved typically notify the lender.
Preparing for the Business Loan Interview
Armed with all the necessary documentation, you’re now ready to proceed with the business loan interview. Prepare for the interview by doing a trial run with a friend and have your answers ready. Some possible questions can include, why you need the finances and when you intend to pay back the loan. Make sure you’re very familiar with all the details of the business plan and respond to questions with confidence. You need to project the viability of the business proposal you’re presenting.
You might not hear about the loan approval right away. Make it a point to inform the lender of positive developments that may come up after the business loan interview.
Applying for a small business loan and going through the business loan interview can be something of a challenge. But, you can make a success out of it and nail that interview. Remember to have the necessary documents ready, and let your passion for your business and its potential shine through.