Answer these 5 Questions before Applying for a Commercial Loan (2024)
July 24, 2019
When you are ready to apply fora commercial loan, be prepared to answer a lot of very importantquestions about your business. The initial information yougive to a loan officer will provide him or her a general idea as to whether your request is something that their particular bank would be able to approve. Italso shows that you have given your loan request some thought before you come in to visit with the loan officer about your business needs.
We are often askedabout the best way to prepare for an initial visit with a Commercial Loan Officer.Here is our list of the Top 5 Questions we ask during a businessloan exploratory meeting.
What dollar amount do you needfor your loan request?
What length of term do you need to repay the loan in monthly installments?
What entity will the name of the loan be under? (New or Existing Entity)
What type of collateral will you be able to pledge for the loan request?
It is also important to call ahead to schedule your meeting with a Commercial Loan Officer before goinginto your local branch. Thisensures you get to visit with the appropriate lending officer for the type of loan that you need. This also allows the loan officerto block adequate time to visit with you and talk about your loan request. The key to success with business lending is to establish a relationship with your banker so that he or she becomes familiar with your business goals. This relationshipwill help guide the future of your financial needs.
Don’t Wait for Desperate Times to Secure a Loan
Business owners often turn to commercial loans in times of hardship but hesitate to seek funding when business is good. Consider applying for a loan when your market sector or industry is booming because lenders will be more confident about your potential success. Our small business and commercial loans offer competitive rates of interest and payment schedules designed to meet the differing needs of our customers. We also provide the flexibility your business needs for short-term expenses like payroll, inventory purchases, or working capital.
Ready to speak with a TGB lender? Call1-800-467-7216/ emailinfo@texasgulfbank.com Or visit one of our manylocal banking centers
One of the first things all lenders learn and use to make loan decisions are the “Five C's of Credit": Character, Conditions, Capital, Capacity, and Collateral. These are the criteria your prospective lender uses to determine whether to make you a loan (and on what terms).
One of the first things all lenders learn and use to make loan decisions are the “Five C's of Credit": Character, Conditions, Capital, Capacity, and Collateral. These are the criteria your prospective lender uses to determine whether to make you a loan (and on what terms).
Applications will typically ask for your contact information, income and credit score. They may also ask you how you plan to use the funds and how much you'd like to borrow.
The five C's, or characteristics, of credit — character, capacity, capital, conditions and collateral — are a framework used by many lenders to evaluate potential small-business borrowers.
FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
Lenders need to determine whether you can comfortably afford your payments. Your income and employment history are good indicators of your ability to repay outstanding debt. Income amount, stability, and type of income may all be considered.
The bank must consider the five "C's" of credit each time it makes a loan. Capacity refers to your ability to repay the loan. The prospective lender will want to know exactly how you intend to repay the loan.
Loan agreements typically include covenants, value of collateral involved, guarantees, interest rate terms and the duration over which it must be repaid.
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