"If you have a $200,000 mortgage on a house worth $250,000, and you have $200,000 in student loans, the bank may not see you as a good candidate for a loan," Hoeksema says. What is your experience level with reviewing and filing loans? With the help of a trusted mortgage advisor, it’s possible to organise your thoughts and find the right option for you. Thank you for checking it out! What is a Personal Loan? Mortgage Questions and Answers. Do I have adequate cash flow to repay the loan? Here’s what you should be asking when it’s time to sit down with a reliable mortgage advisor. Your banker will probably ask you to provide financial projections for the business. Multiple great answers to 25 most common loan processor interview questions–basically any questions you may realistically face, will help you streamline your preparation for the meeting with the hiring managers, and walk away with a new employment contract. The advent of daily, weekly, and monthly periodic payments is a departure from a more traditional monthly payment approach. We will provide you with all the detailed instructions to ponder on the points which will help you to understand the process of getting a proper loan without any fear of hidden charges or interests. “Most business owners understand that if they’re collateralizing their house and the business fails, they could lose their house,” Brutman says. So here’s what to expect a bank to ask for when you apply for a commercial loan for your business. Apply for a Home Loan Now! Ask the loan officer what the bank’s turnaround time is at the time of application. The following excerpt is from the staff of Entrepreneur Media's book Finance Your Business. Continue shopping for the right loan until you find a mortgage broker or lender you feel comfortable with if you don't like the answers you receive. When applying for a business loan, you will need a lot of documentation. When you take out a loan, find out if you're free to pay it off early without any penalty. In this article, we will provide you with all the useful and some of the most important questions to ask before applying for a bank loan. "By having good excess cash and a paid-off or [paid-down] line of credit, it shows the lender you are responsible with debt and can handle an increase in your total credit.". Related: 6 Smart Reasons to Get a Business Loan, Your banker will probably ask you to provide financial projections for the business. As with personal credit, you can find your business credit score through Experian, TransUnion or Equifax. And those are the things you need to ask about when you apply for a home loan. This book gives you the essential guide for easy-to-follow tips and strategies to create more financial success. Explore our giveaways, bundles, "Pay What You Want" deals & more. A personal loan is money borrowed for personal reasons. Also, it's a good idea to ask the right questions - here are five essential ones to take to the lenders you approach. Collateral. Make sure to include your debt repayment plan in those projections. The best way to determine this is to create a monthly cash-flow projection. Additionally, you might be better off getting these questions answered by an objective source instead of receiving biased information from a loan officer or real estate agent after the mortgage application process has begun. Here are some of the key questions you should ask before starting an application. Amplify your business knowledge and reach your full entrepreneurial potential with Entrepreneur Insider’s exclusive benefits. Plus, enjoy a FREE 1-year. How do I know this is the best rate? There are plenty of things to consider before agreeing to a business loan. “By having good excess cash and a paid-off or [paid-down] line of credit, it shows the lender you’re responsible with debt and can handle an increase in your total credit.”. Business owners often think if they purchase a piece of equipment for $100,000, they should be able to borrow $100,000 by pledging the equipment as collateral. Do I have all the documentation I need to apply for the loan? Business owners often think if they purchase a piece of equipment for $100,000, they should be able to borrow $100,000 by pledging the equipment as collateral. For just $5 per month, get access to premium content, webinars, an ad-free experience, and more! If the score isn’t as high as you think it should be, it might be because there are outstanding liens against your business. The best way to determine this is to create a monthly cash-flow projection. But banks usually don’t agree, Hoeksema says. Get exclusive access to great content in our library & be the first to get updates on new posts. Instead, you should put borrowed dollars into the parts of the business that will generate more revenue over time and help reduce future borrowing needs, Gass says. ", Bankers may want to look at your "global financial statement," including personal information like outstanding student loans, personal credit card debt and mortgage payments. Applying for a loan is something that should ideally be done after putting some thought into it. "If I take that dollar and leverage it, put it into sales and marketing and drive more revenues -- $1 driving $5 -- then it's worth it. For example, if you’re seeking an SBA loan, Arora recommends you provide the last three years of business and personal tax returns, personal financial statements and financial projections for the next 12 to 24 months. "It will reflect poorly on you if you come in to the bank asking for $50,000, then they ask you to create a cash-flow projection and you find out that you actually need $100,000," says Adam Hoeksema, co-founder of Muncie, Ind.-based ProjectionHub, a Web app to help entrepreneurs make financial projections. Until your business reaches a substantial size ($5 million to $10 million in annual revenue or more), the bank is going to rely heavily on your personal financial statement and personal credit score to determine the creditworthiness of your business. “Even if you have stellar personal credit and good assets, if a lot of business contacts are saying you’re paying them late, that’s going to scare off lenders.”, Bankers may want to look at your “global financial statement,” including personal information like outstanding student loans, personal credit card debt and mortgage payments. While this question may seem obvious, it’s sometimes the obvious questions that prove most difficult to answer. Find out what a lender’s policy is in the event of your death to best determine how to protect your family. After reviewing these questions to ask before getting a loan, you may decide a personal loan is right for you. Applying for a bank loan involves much more than filling out paperwork and saying a prayer. Find out what a lender's policy is in the event of your death to best determine how to protect your family. Before you approach the bank, make sure you have a good handle on how much cash you actually need. “Banks will value your asset below what you think the value should be, and then they’ll only lend up to a certain percentage of the value of the asset.” For example, banks might lend up to 70 percent of the value of a new piece of equipment, and maybe only 60 percent for used equipment. 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