A business loan is the most popular financing option for entrepreneurs looking to expand their business. However, before pitching a business loan request to the lender, entrepreneurs must prepare themselves thoroughly to boost their loan approval chances. Below, we are going to have a look at some of the most important questions that can be asked by the lender during the business loan interview. If you are an entrepreneur looking to avail a business loan, make sure that you keep yourself well-prepared for the following questions:
- What is your business plan?
It is essential that you plan your business strategy well in advance before applying for a business loan. Lenders may ask you your business plan to evaluate your repayment capacity. Therefore, a well-defined business plan can improve the chances of your loan approval. Make sure that your business plan includes important aspects such as, the future goals of your business, profit-generating factors of your business as well as funds required to purchase equipment and inventory, hire new staff, etc. This will reflect your seriousness towards your business, which may eventually boost your loan approval chances.
- How much loan amount do you need?
You should have a clear idea about the purpose behind availing the business loan. This will help you estimate the loan amount you would need. The reason of availing the loan could be upgrading infrastructure, promoting products, hiring staff, etc. Make a note of all such business requirements before pitching the loan request to a lender. Lenders will sanction your desired loan amount only if they are convinced the loan amount would be used wisely.
- What is your credit score?
Your credit score determines your current financial status. Therefore, lenders will certainly enquire you about your credit score and repayment history before approving your loan application. The higher your credit score, the higher will be your chances of getting the loan sanctioned. Thus, make sure that you work towards improving your personal as well as business credit score before applying for a business loan. A credit score of 750 or above is considered to a good score and lenders will likely approve your loan request, provided you satisfy other eligibility criteria
- Does your business have the repayment capacity?
Even after checking your credit score and repayment history, there are chances that the lender may ask this question. In such a scenario, you should elaborate on the future business plans. Also, explain the potential profit-making areas of your business to convince the lender about your repayment capacity.
- What collaterals are you providing?
- Business loans are usually secured loans, wherein you have to pledge collateral to avail the loan amount. Collaterals are the security that protects lenders in case the borrower fails to repay the loan. Most lenders may enquire you about the collaterals before approving the loan. Also, the amount that you can borrow may depend upon the value of collaterals.
- However, with some financial institutions, you can avail a business loan without providing any collateral. For instance, you can get a Bajaj Finserv Business Loan available at Finserv MARKETS at zero collateral. This keeps your valuable assets if you happen to default the loan.
Apart from being collateral-free, Bajaj Business Loans also have attractive interest rates, flexible repayment options, low processing charges and prepayment penalty, etc. Moreover, you can avail the loan amount within 24 hours. Minimal business loan documentation, Instant approval, and quick disbursal are some of the major benefits of Bajaj Finserv Business Loans.