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7 questions lenders ask during business loan interviews

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

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By

Veronica Ott

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Stacie Hurst

Updated

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You’ve filled out the paperwork, gathered your documents and put together an ace business plan. Now an interview is the only thing hindering your business from going to the next level. Not every lender will ask you to come in and impress them with your business acumen, but if you’re shooting for a business loan, you may have to attend an interview. 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.

During the interview, your goal should be to prove the following:

  • Your business has the financial stability to make loan payments on time and in full – 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, assets and general ability 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. Even if your business plan is solid and you’re confident about obtaining financing, it’s never a bad idea to prepare. Not only will you appear more professional, but it also shows that you take your finances and business seriously. Here are 7 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 this an easy one to answer.

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 modelling your answer using an elevator pitch. It should highlight your business’s strengths and how it fits in your industry’s market in a few sentences.

4. How do you explain any past business failures?

Prepare to explain any financial hardships that may set off alarm bells. In your response, explain how you effectively overcame any business failures to give the lender confidence in your ability to handle anything.

5. Can you show me a clear history of your accounts payable and receivable?

Have documents at the ready along with explanations for any irregular or unusual information in 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 the first few years of business. Be honest about your score – lenders typically run a credit check, anyway. If there are any unusual items on your credit report, be prepared to discuss them with the lender.

Compare business loans in Canada

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Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
OnDeck Business Loan
OnDeck Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
$100,000/year
6+ months
Secured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum annual gross revenue of $100,000.

OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.
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Merchant Growth Business Loan
Merchant Growth Business Loan
12.99% - 39.99%
$5,000 - $500,000
3 - 12 months
$10,000 /month
6 months
Unsecured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months and have a minimum of $10,000 in monthly sales.

Merchant Growth offers financing tailored to business needs. It specializes in providing capital based on future cash flows, but it also offers fixed solutions. Fill out an application within 5 minutes and get your funds within 24 hours.
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Loans Canada Business Loan
Loans Canada Business Loan
6.60% - 29.00%
$4,000 - $500,000
3 - 60 months
over $10,000/month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a Canadian business bank account and show a minimum of $10,000 in monthly deposits ($120,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $500,000. Complete one simple online application and get matched with your loan options.
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Tips to ace a business loan interview

Practising interview questions is only one way to get ready for your interview. Here are a few tips to improve your interview performance.

  • 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.
  • Research your lender and your interviewer. Performing a simple Google search on your lender and interviewer can go a long way. Look for information about other borrowers’ experiences and any professional details, like where they went to school or how long they’ve been with the organization.
  • Hold a mock interview. Practising an interview can reveal both strong and weak points in your argument. Doing it more than once can help you measure improvement. Ask a friend or family member to rehearse with you.
  • 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.
  • Take along visuals. Photos of your business, products or even artistic graphics of your services can bring your presentation to life. Make sure your visuals are uncluttered, easy to read and to-the-point.
  • Be confident. Practise power stances, get enough sleep, wear your lucky socks – do whatever makes you feel like you’re going to crush this interview. When in doubt, remember that you’ve prepared and are ready for anything. You’ve got this.

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 favourable 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.

Remember: At the end of the day, financial representatives want to make sure that the bank’s money is going toward a viable enterprise and won’t be mismanaged. While it’s important to give off a professional and confident image, don’t let yourself get overwhelmed by focusing too hard on the details of looking good.

Focus on showing the bank that you’re responsible and capable and that your business plans have a great chance of succeeding. Most importantly, you should leave the bank confident that its money will be paid back in full.

What can I do if I get rejected for a business loan?

Chances are, there is a very logical reason for being rejected and it had nothing to do with your business loan interview performance. It could be that you’re a start-up and the lender doesn’t work with start-ups. Maybe there was something in your financials that the lender found to be too risky. In the event of a rejected business loan application, take the following steps:

  • Figure out why you were rejected. Some lenders may inform you why you were rejected, whereas for other lenders you may need to ask directly.
  • Incorporate the feedback. Whatever the reason you got rejected, incorporate the feedback into your business plan, visuals for presentations, financial statements and so on.
  • Learn from the experience. Even though it can be discouraging to get rejected, try your best not to take it personally. At the end of the day, it’s just business and that lender wasn’t the right match. Learn from the experience and you’ll do even better during the next business loan interview and application.
  • Apply for business loans again. When you’re ready, begin applying and interviewing with new lenders. Always check the minimum requirements before applying to ensure you’re eligible and not rejected for something foreseeable. Be sure to incorporate previous feedback from lenders into future loan applications too.

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 entered 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.

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, unreasonable interest rates or unrealistic repayment periods. Make sure you can afford the loan and meet the conditions before you sign any contract with a non-bank lender (or any lender, for that matter).

Bottom line

Business loan 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 non-traditional 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.

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