There’s rarely a situation when you’re getting a loan either from a bank or a private lender that you wouldn’t be asked certain questions to validate the transaction process. Most people find this process of documentation rigorous because in most cases, especially when it involves a bank, it usually goes on for a while before you’re ascertained and considered eligible for a loan.
These questions and other documentation processes are usually to curb some of the risk factors associated with loans. When you file for a loan from banks, the bank calls you in for certain interview-like follow-up questions. It’s in your place to allay the banks’ inherent fear by providing concrete answers. Here are some of the questions to look out for.
1. How Much You Need: First and foremost, banks deal with numbers so expect that the very first question will be about the amount you need. This is usually the basis upon which subsequent questions will come from. When the loan officer at the bank asks how much you’ll need, they expect an exact answer and not some vague response as this could leave the impression that you don’t have a full picture of what you need the loan for.
2. The Purpose: Any bank you walk into for a loan will be interested in knowing what the purpose of the loan is for. They need an answer to this question as this will guarantee if it’s something capable of bringing a solid return to enable your payback.
3. Collateral: Generally, rarely will you come in contact with a loan officer in a bank willing to lend you any amount without collateral to back that up. Here, you’re expected to pledge something viable that the bank could lay claims on if you fail to keep your part of the bargain.
4. Business Plan: Mostly, banks only guarantee loans to businesses. Before you can get a loan for your business, especially huge amounts, the bank will expect to see a draft copy of your business plan that provides basic details.
5. Credit Scores: There’s usually a credit score level that a bank expects from any borrower. Banks require this financial detail from any borrower else, the loan application is likely to be denied. You’ll be asked questions about past and current loans, personal and business credit scores, any active investment accounts, Tax ID number, etc.
6. Personal Finance: The bank will ask you questions about your personal finance. As the owner of the business, the bank will want to know about your personal finance as this gives clues to your financial history.
7. Payment Plan: Many banks will want to know how you’d like the payment plan to be structured. How long it would take you to pay back and a plan on how payback flows.
Lending is a risky venture, banks and private loan schemes understand this and this is usually the reason why certain measures are put in place to allay most of those risks.