What Questions Will Prospective Lenders Have Before Loaning My Business Money?

What Questions Will Prospective Lenders Have Before Loaning My Business Money?
AllBusiness.com

I am planning on approaching a commercial lender for money for my growing business, and I want to be as prepared as possible. What questions should I anticipate?

Lenders will likely ask the following questions:

How will you use the loan proceeds?
How will you repay the loan?
Does your business have the ability to make the payments required under the loan?
How much do you want?
Can you put up any collateral?
Are you willing to put up personal guarantees?

Also, the lenders will typically ask for the following documents:

Your company's incorporation or other organization documents
Your company's tax returns for the last 3 years
Your profit and loss statements and balance sheets for the last 3 years
Any business plan
A description of any litigation or bankruptcy filings
A completed loan application
Your Board of Directors minutes approving the borrowing (for corporations)

One way to improve your chances of getting your loan improved (and to make sure you have good answers to all these questions) is to prepare a written proposal. Read our for "Elements of Successful Small Business Loan Application" guidance.

Find more tips and advice on equity funding for small and growing businesses at AllBusiness.com.