Please help! I need these questions answered What is the current environment lik
ID: 2659190 • Letter: P
Question
Please help! I need these questions answered- What is the current environment like for bank loans to small business
- What are the current rates the bank charges for business loans
- What criteria are considered in the rate of the loan and the amount than can be borrowed?
- What is the difference between a line of credit and a loan?
- What financial information is required of the lender?
- How do I obtain a loan application?
- What types of questions might be asked in addition to the information contained in the loan application.
- What types of security might be requested to secure the loan.
- What types of business normally get loans
- What are the characteristics of successful borrowers?
Explanation / Answer
*Quite a bit of this is subjective to individual banks, so you may want to review a textbook if you have one.*
1) Banks are being much more discerning in offering loans than in the past. Many banks are requiring lots of supplemental information before offering loans.
2) Depends on the bank, but somewhere around 3.25% (https://origin.bankrate.com/rates/interest-rates/wall-street-prime-rate.aspx)
3) Sales, Profit and Loss Statements, Outstanding Credit, Projected Financial Statements, etc.
4) Lines of credit are a cash balance which can be borrowed against the specified interest rate, but it can be taken piecemeal as needed. Loans are a lump cash sum that must be repaid by the stated settlement date.
5) See 3,
6) Go to the bank, contact a loan officer, visit the website
7) Resume, Personnel Income Tax Returns, Personnel Credit History, etc.
8) Fixed assets (equipment, property, etc.)
9) Practically all businesses obtain loans or credit lines, especially those that make large purchases for equipment, inventory, etc.
10) Pay back within any coupon periods, shop around for the best rates, plan for financial needs.