Business Finance

Things That the Bank Will Ask When You Need A Business Loan

Editor

Currently in Australia there are just under 2.5 million businesses registered to operate within the country. You fall in that number somewhere, and like most of them at one time in their operating history a business loan is needed to get started, to expand, or to upgrade equipment and computer systems. No matter what the reason is for needing some extra funds, you will have to go through the same process that all the ones before you have dealt with.

Every bank lender will have specific questions that they will ask. Below you will find some of the most common ones, but do not be surprised if they throw something else at you. Be prepared. Have all your papers in order. And go get that money.

  1. Amount-One of the first, and most obvious, question is how much you intend to borrow. Every bank has set limits that they are willing to give, depending on many factors which we will cover in a second. It is important that before you go in that you have a set number that you plan to apply for, along with any documentation that supports the amount.
  2. Need-You will need to explain exactly what you need the money for. You should have a detailed outline of what you need it for, and how much each of the needs cost. For example, if you need a dozen computers for the office staff, you will need to show how much each item will cost, and what it is and for what it is needed.
  3. Collateral-What can you put up as collateral if needed. This is used for some specific loans, as well as for loans that they consider to be “high risk.” Collateral will protect the bank from losses in case you go into default. It is common procedure to ask for it from the lender when applying for business loans, so have something prepared and with you.
  4. Business Plan-The bank will want to know what your business is, what you do for the community, and what you plan to do for the community. (Community meaning anyone within your customer base). You should already have a business plan set up since it is one of the most important steps to ensure success. The banker will need to know the specifics of the plan to evaluate your application.
  5. Business Financials-They will also want to know the details of your financials. Your business financials that is. They will need to know your history when it comes to paying your expenses payable. Any past loans that you have been paying on or have already paid off. They will evaluate you all the way down to how you pay for your utilities and payroll. Every financial aspect of your business needs to be available to them when they ask for it.

Getting a business loan involves numerous steps that require one main thing from you. Patience. You must chill and wait for the bank to decide. Sometimes they can take their sweet time getting to your application. Other times they may be bombed with requests so they will have to sort through the applications to decide the ones that are the best risk for them.

It is highly suggested that you apply for a couple of different loans to make sure that one goes through. Either way, though, you will need to wait for an answer. You can always deny the one that does not give you the best terms later when they authorize your loan. Just be careful not to sign on the dotted line until you read the contract, and you understand every aspect of it.