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How to successfully interview for a business loan

Applying for a bank business loan? You may have to present your case in person.

You’ve filled out the paperwork, gathered your documents and put together an ace business plan. Now only an interview stands between you and what your business needs to take it to the next level. Not every lender asks borrowers to come in and blow them away, but if you’re shooting for a bank loan, you may have to. Go over the questions your lender may ask and memorize some handy tips before your big day.

Why do banks conduct interviews for business loans in the first place?

Interviews are a way for banks to make sure you’re a worthy candidate for their money, and that what you’re looking for matches their bottom line. Think of it like a job interview where you’re the potential employee persuading your dream employer to overlook any hesitation in giving you the chance to shine.

Your goal is to prove as best you can that:

  • Your business has the financially stability to make loan payments on time — even when there’s unexpected trouble.
  • Your business has a track record of successful spending, borrowing and positive cash flow.
  • You — the owner — have the finances or assets to cover the loan if your business goes bust.

7 business loan interview questions to prepare for

Don’t be caught off guard during an interview. Preparing not only helps you sound professional, but it also shows that you take your finances seriously.

Here are questions you should expect to answer during your interview:

  1. Why does your business need a loan? You’ve probably already answered this in your business plan and loan application, making it an easy one.
  2. How long will you need to pay back your loan? Come up with a realistic term, and back your answer with numbers and research.
  3. How would you summarize your business? How is it unique? Try modeling your answer on an elevator pitch. It should highlight your business’s strengths and how it fits in your industry’s market.
  4. How do you explain any past business failures? Prepare to explain any financial hardships that may set off alarm bells.
  5. Can you show me a clear history of your accounts payable and receivable? Have documents at the ready along with explanations for any oddities within them.
  6. What kinds of insurance do you have? Bring along your insurance cards and make sure you meet your lender’s coverage requirements if it has any.
  7. Can you tell me about your personal credit? Your personal creditworthiness matters more if you’re in first few years of business. Be honest about your score — lenders typically run a credit check, anyway.

6 tips to ace a business loan interview

Practicing interview questions is only one way to get ready for your interview. Here are a few key ways to improve your interview performance.

  1. Know your business plan inside out. The only way you can answer any left-field curveballs is to make sure you’re deeply familiar with your business plan. Backing up your claims with figures and examples definitely helps.
  2. Research your lender and your interviewer. See if you can learn about the types of businesses your lender prefers. You might be able to read online about other people’s interview experiences.
  3. Hold a mock interview. Practicing an interview can reveal both strong and weak points in your argument. Doing it more than once can help you measure improvement.
  4. Have relevant documents on hand. Even if it isn’t required, it doesn’t hurt to take hard copies of your financial records, proof of past ownership and charts of current management or any other documents you think can strengthen your argument for why you should land this loan.
  5. Take along visuals. Photos of your business, products or even artsy renditions of your services can bring your presentation to life.
  6. Be confident. Practice power stances, get enough sleep, wear your lucky socks — do whatever makes you feel like you’re going to crush this interview. You’ve got this.

Must read: My interview went terribly. What do I do?

First of all, don’t panic. There’s a chance your nerves only made you think it went badly when really, it was fine.

And keep this in mind: Even if you threw up on your interviewer, you aren’t necessarily out: The interview is only one of many factors your potential lender considers. If you’re worried, you can follow up with any other developments that might put your business in a favorable light.

Then, you wait. While waiting, consider looking at other lending options to prepare for the possibility that your application is rejected. And while you’re at it, you could broaden your search to include non-bank online lenders.

How do I know I picked the right lender?

Before you decide on a bank loan for your business, ask yourself how you can get the most out of your financing:

  • Will this type of loan help my business accomplish its goals? Getting great rates and terms on a loan won’t be much help if you can’t use it for your specific funding needs. Find the right type of business loan for what you’re trying to purchase.
  • Can I borrow the amount I need with this loan? Look for a loan that can give you exactly as much as you need. Taking out more than you need can land you in unnecessary debt.
  • Is the interest rate competitive? Compare estimates of possible interest rates when weighing the lenders you’re interested in.
  • What are the fees? This will help you understand the total cost of the business loan. Some banks charge application, origination, prepayment and late fees — often combined into the APR. But read through the fine print for any hidden fees or terms that could trip you up.
  • Can I afford to pay back this loan? Get a loan term estimate along with your interest rates to calculate the total cost and payments you’re facing. You want to hit that sweet spot where you’re paying as much as you can reasonably afford to avoid tacking on unnecessary interest.

Bank business loan vs. non-bank business loan: Which is better for me?

Bank loans

Banks are the more traditional choice for loans and can be a good option for those who want familiarity, but they’re not always right for every business. They offer the meat and potatoes of business loans: term loans, lines of credit, equipment and commercial loans — and not much else.

Their eligibility is also stricter than other options, and they’ve only tightened their requirements since online lenders have come to the scene. Interviews are one of the ways they make absolutely certain they’re not taking too much of a risk by giving your business money.

Compare bank business loans now

Non-bank loans

This ain’t your grandma’s loan. Relatively new to the lending scene, online lenders often promise a quick and easy application and flexible borrowing options. The process can be faster than with a bank, in fact, you typically won’t have to go anywhere for an interview. And because they’re more willing to take a risk, you can often get your money in a matter of days.

But watch out: Some online lenders come with astronomical fees or unrealistic repayment periods. Make sure you can afford the loan before you sign any contract with a non-bank lender (or any lender, for that matter).

Compare the best non-bank business loans now

Bottom line

Interviews don’t have to be a nerve-racking ordeal. Preparing to ace it is the most you can do on your end. But remember that a good interview doesn’t necessarily make or break your chances of approval — banks and nontraditional lenders consider many more factors before ultimately deciding you’re the one.

If you’re worried, or simply want to know all your options, read our guide to business loans to familiarize yourself with more than just the interview process.

And if you want to skip the entire interview and document process, it's possible to find a business loan with few or no document requirements. But these loans are often more expensive than business loans that require documents.

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