10 Questions Asked by the Lender when you Apply for a Business Loan

Last Updated : Aug. 13, 2020, 4:02 p.m.

Business loans play a vital role to boost your business activities. Some businessmen take a loan for managing their working capital and some take it to clear out their debts. Whatever may be the reason, business loans really help businesses for expansion. On the other hand, there are some business owners who are unaware of the questions that are asked by the lenders when they take a loan. So, here you can see the various questions asked by the lender when you apply for a business loan. You must also see the answers that you will have to tell the lender when they are interrogating you.

List of Business Loan Questions Asked by the Bank

• Nature of Business
• Business Ownership
• Vintage Period
• Cibil Score
• Loan Required
• Any Existing Loan
• Secured Loans or Unsecured Loans
• Purpose of Loan
• Turnover History
• Tenure of the Loan

Nature of Business

This is the first question that every bank’s representative will ask you when you are applying for a business loan . In this question, you will have to tell the nature of your business whether it is manufacturing, services, or trading business. Every business has different eligibility criteria for the loan.

Business Ownership

There are some lenders who will also ask you about the ownership of the business in which you will have to tell him whether your business is a sole proprietorship business, partnership business, or a company. On the other hand, you will also have to tell about ownership of the business property whether it is owned or rented.

Vintage Period

Business vintage period simply means that how old is your business. You will have to tell when you are involved in the business activities and carrying out a business. The vintage period of the business also determines the loan amount that you are willing to borrow.

CIBIL Score

Cibil Score is the credit score that simply authenticates you to tale a business loan. So, the lender will also ask you about the Cibil Score and if you are having a negative Cibil Score then there are fewer chances of getting a business loan. There are some factors that affect your Cibil Score and they are Repayment History, skipped EMIs, and many more.

Loan Required

This is the basic question asked by almost all the lenders. They will ask you the loan amount that you are willing to take for your business. There are multiple factors that might affect the loan amount like your Cibil Score, Loan Repayment History, and many more.

Any Existing Loan

You will also have to tell the lender about the existing loan whether it is a personal loan or a home loan. Once the lender knows the loan amount of the existing loan then it will tell you the amount of maximum business loan that you can take from the bank.

Secured Loans or Unsecured Loans

This question will be asked once you are eligible to take a loan. Now you will have to tell the lender whether you and a secured business loan or a business loan without collateral . Usually, the loan amount in a secured business loan is high in comparison with the unsecured business loan.

Purpose of the Loan

You will also have to tell the purpose for which you are taking a business loan. It can be used for business expansion, purchase of machinery, buying raw materials, paying out debts, and many other purposes. So whatever may be the purpose of the loan, you will have to tell the lender.

Turnover History

The lender will also ask for the documents that will show the turnover of the business. It can be the Balance Sheet of the Company or the Income Tax Return Document. Different Banks ask for different amounts of turnover for giving business loans.

Tenure of the Loan

The tenure of the loan is the time period for which you borrow a loan. So the lender will ask you about the tenure for which you are willing to take a business loan. So, depending upon the repaying power you can decide the tenure of a business loan.

Conclusion

Well, now you are prepared to answer all the questions asked by the lender when you apply for a Business Loan. You can go through all the questions and their answers so that you will not have to face any kind of difficulty when you are taking a business loan.