|Posted by: Susan Martinez Dec 3 2003, 11:54 PM
| I really love your site lots of good information. I need a loan for my business but don't know how to prepare for the meeting.
What kind of questions is he going to ask?
Thanks a lot for your answer.
|Posted by: Rick Dec 4 2003, 08:04 AM
| Hi Susan,
As you did not indicate the type of business that you are in, I am going to keep my response very generic. First thing that you want to have prepared is a comprehensive business plan that details your company / product, your position in the market (i.e. competitors, state of the industry, etc), your marketing plan, you historical financials, and projected financials.
When you go seeking a business loan, or any loan for that matter, the bank is most interested in what you want the loan for and your capacity to repay the loan. The bank will want to know whether you are looking for a working capital loan, equipment loan, construction loan if expanding operations, etc. The reason that the purpose of the loan is important is for security reasons. For an equipment loan, the bank will want to take (at a minimum) the new piece of equipment as security. For a working capital loan, they may want a fixed charge on your entire operation, or take any receivables and inventory as security.
Depending on the size of the loan and or the type of loan, the bank may want your personal guarantee. If this is the case, they will be looking for personal net worth statements.
Your best plan of attack would be to go into the meeting with a well developed business plan that outlines why you want $X from the bank (send this prior to the meeting to allow your banker to go through it and make a list of questions). Be prepared to talk honestly about all aspects of your business. Remember that you know your business far better than the bank, which will mean that you will likely have to explain and reexplain your business (depending on how complicated it is) until the banker 'gets it'.
Hope that this helps a bit.
|Posted by: loanuniverse Dec 4 2003, 12:06 PM
Rick provided some good feedback already, but let me see if I can expand a bit further.
A knowledgeable lender will want to assess your character, your capacity to repay, the collateral that you can pledge, the conditions under which the loan will be structured and the amount of capital that you have at risk when compared to the risk that you are asking it to take on.
In order to do that, you should make sure that you go to this interview with a lot of answers ready. In fact, when you do your initial presentation to the lender bring a sheet of paper with a brief overview of what you are looking for. It might be entirely possible that a lender will want some changes to your request. In fact, I would be surprised if you were able to structure the loan in a way that meets your objectives and those of the lender.
At a minimum be prepared to answer:
- How much money do you want to borrow?
- When are you going to pay it back?
- How are you going to pay it back
- Why will the loan be in your business benefit?
- What exactly are you going to do with the money?
- If the business can not pay it back, how is the lender going to get its money?
Hope this helps.
P.S: If your business is already established you might not need to go into the meeting with a full fledged business plan. However, you should be able to summarize your business operations so that the lender understands exactly what it is that you do.