When applying for a loan, there are some critical questions to answer to be approved quickly and effectively. These questions allow the lender to understand better your overall financial situation and reasons for borrowing money.
The bank or lender would use the form information to determine the risk factor and assess whether they can provide you with the financial assistance you need. Being prepared will also help speed up the application process and make it easier for you and the lender. Make sure that you review this list of 10 essential questions before filling out your loan application form!
How much can you afford?
When applying for a loan, the lender will want to know how much you can afford to pay back each month. They'll look at your income and debts to understand what you can handle.
What are your repayment plans?
If you're asking for a loan, the lender will want to know how you plan on repaying the money. Will you be using personal income, business revenue, or a combination of the two? How much can you afford to pay each month? Over what period will you repay the loan? Be prepared to answer these questions and more when applying for a loan.
How will you use the loan proceeds?
Expect a set of follow-up questions such as:
- What are your business's long-term goals?
- What are your expected monthly sales?
- How much does your company currently spend on inventory?
- Do you have any existing loans or lines of credit? If so, how much do you now owe?
- Are you current on all of your taxes and licenses?
- How many employees does your business have?
What makes you unique and different from other applicants?
To stand out from other loan applicants, you need to be able to articulate what makes you and your business special. What do you offer that nobody else does? What are your unique selling points? Why should a lender believe that you will be successful? Answering these questions can help you create a robust loan application that will get noticed.
Why should we give you the loan instead of others?
If you're asking for a loan, the lender will want to know why you're a good candidate for the money. Here are a few things to keep in mind when crafting your answer:
- Be clear and concise
- Focus on your strengths
- Highlight what makes you unique
- Paint a picture of your future success
- Show that you understand the risks involved
- demonstrate a realistic repayment plan
Where do you see yourself in five years?
Do you see yourself in the same job, with the same company? Do you see yourself in a different role within the company? Do you see yourself starting your own business? Do you see yourself going back to school?
In five years, where do you want to be?
What steps are you taking now to help get you there?
These are all important questions to include in your loan application form because they will give the lender a better understanding of your goals and how likely you are to repay the loan.
Can you share details about your assets and liabilities?
Your loan application form should include questions about your assets and liabilities. This information will help the lender determine whether or not you are a good candidate for a loan. Include details about your assets, such as your home, car, and any other property you own. You should also include information about your liabilities, such as credit card debt, student loans, and other debts.
How does this loan fit into your financial plan?
A loan can be a great way to finance a new business venture, but it's essential to ensure that the loan fits into your overall financial plan.
What are your plans for raising cash?
Expect a set of follow-up questions such as:
- Do you have a detailed business plan? This should outline your expected expenses and income for the next few years and your strategy for raising additional capital.
- How much money do you need to borrow? Be specific and include all anticipated costs, such as equipment, inventory, salaries, and marketing expenses.
- How will you use the loan proceeds? Include specifics on how the funds will be used to grow your business.
- What is your current financial situation? Lenders will want to see a clear picture of your business's financial health, including information on revenue, expenses, assets, and liabilities.
- What collateral do you have to offer?
Do you have any backup plans if financing doesn't come through?
No one likes to think about the possibility of their business loan being denied, but it's always best to be prepared. If you don't have a backup plan, you could find yourself in hot water.