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Loan Interview
What follows is a listing of questions
typically asked in a loan interview. By being prepared in advance
for these questions, you will be better prepared for those questions
that may be asked when applying for a loan.
The Basic Loan Request
- How much money do you want?
- How long is it needed for?
- Itemized Startup costs -What
specifically is it needed for? Total project cost, sources of
funds (including equity), uses of funds specifically.
- How is the loan intended to be repaid?
Requested terms, secondary and third sources of repayment.
- Contractors Estimates, if you’re
using a contractor or are doing construction.
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Business History (Dun and Bradstreet reports
sometimes help)
- Name, address, phone number, officers
of the company (main contacts) and their duties.
- Location of your facility and whether
you own or lease. Description of whether your facility has land,
building and or equipment.
- Number of employees.
- What is the company’s present
legal and tax form? Has that changed in the past?
- How long has it been under it’s
present control? How long in business? How it started and how it
evolved over time.
- Who are the principal owners, what
share does each own?
- Is management separate from ownership?
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Nature of Business
- Is this a manufacturing, wholesaling,
retailing, service or agri-business?
- What exactly are the company’s
products and services? What is the company’s position in
the industry, your niche in the market place (what makes you
unique, and what rate of growth have you been experiencing).
- Mention any awards or accomplishments
of business achievement the company has received.
- If this is a new business, discuss the
industry’s history and why you are starting this business.
- Who are it’s customers? What is
the market description? What are the market areas? Is the
company and/or it’s customers in our trading area?
- Industry Analysis: The Dept. of
Commerce or a similar Industry Analysis (RMA – Robert
Morris Associates) will help give an analysis of the industry.
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Plant and Equipment
- Are the facilities owned or leased? If
leased, what are the lease terms, options, and renewal options?
- What is its location? Is it in our
trading area? Is it in a desirable location for the type of
business? Is the location functional?
- If owned, are the facilities mortgaged?
- Is the equipment or any portion of it
being financed?
- Is the current plant and equipment
sufficient to meet the needs of the future, or will capital
expenditures be necessary to modernize or expand the facilities?
Is the plant kept clean and in good repair?
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Legal
- What is the legal form of business?
Proprietorship, Partnership, Corp., Limited Liability Co. Is the
name registered (trade name certificate, partnership agreement,
corp. registered) ?
- Are there any suits or judgments in
process either for or against the company?
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Personnel
- How many people are employed? How many
people in various job categories; technical, unskilled, etc ?
- What is the condition of the local
labor market? Is the job market sufficient to fulfill categories
to insure proper expansion or succession to jobs?
- To what extent is the owners family
involved in the operation of the business? (Are they active, or
are they merely drawing a salary in a non-operating capacity) ?
- Is there a labor union? What are their
relations with the Labor union? Strong union? Expiration date of
current agreement? Any past strikes? Why?
- What are the various official duties
(CEO, CFO, Operations, marketing)? Who performs each of these
duties? Is there sufficient depth in management to insure a
smooth succession in management, if the need arises? Is Key Man
life insurance in place?
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The Principals
- Age, marital status, (ensure no
Regulation B violations as this information may not be
required).
- Length of time in this business.
- Are there any outside interests, either
business or personal which might impact the borrower?
- Personal Banking: Where is it done? Do
they invest? What is the nature of personal investments? Their
worth outside the business?
- Will any/all of the principals
personally guarantee? Will they provide personal financial
statements? Are any personal assets pledged to secure any
business loans?
- Is any personal real estate owned? Are
there any mortgages against these properties? If so, what are
debt service requirements?
- Are assets jointly owned? With whom?
- What is the extent of life insurance
coverage? Is the business or family beneficiary?
- What is the extent of contingent
personal liabilities (guarantees, etc.) ?
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Business Banking Relationship
- What bank is currently being used? Are
there more than one bank?
- What is the reason for considering
changing borrowing relationships?
- How much are average deposit balances?
- What is the company’s borrowing
pattern?
- Are any of the loans subject to any
form of collateral security?
- How much in loans is outstanding at
this time? Are there any contingent liabilities for the
business?
- How good is their current relationship
with their present Lenders (name and contact for bank checks) ?
- Are any company funds kept in savings?
Why?
- Does the company lease any equipment?
Does the company use Trade finance services? Foreign exchange?
Cash management? Treasury products/Capital markets? Any other
Financial services?
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Financial Sources-Non Banking
- What bank is currently being used? Are
there more than one bank?
- What is the reason for considering
changing borrowing relationships?
- How much are average deposit balances?
- What is the company’s borrowing
pattern?
- Are any of the loans subject to any
form of collateral security?
- How much in loans is outstanding at
this time? Are there any contingent liabilities for the
business?
- How good is their current relationship
with their present Lenders (name and contact for bank checks) ?
- Are any company funds kept in savings?
Why?
- Does the company lease any equipment?
Does the company use Trade finance services? Foreign exchange?
Cash management? Treasury products/Capital markets? Any other
Financial services?
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