Questions to ask a Bank about getting Small Business Financing, Lines of Credit, Loans & SBA Loans

If you are seeking Bank Financing for your small business in the form of a conventional loan, SBA loan, Line of Credit or some other financing, what are the questions to ask a bank to help you gauge the bank’s ability to come through for you?  Here are three important questions to ask a bank when assessing the feasibility of procuring bank financing in the form of a loan or line of credit.

Where is the Underwriting Committee located?

Having a local underwriting committee has a few distinct advantages over big national bank chains that use central offices for underwriting committees.  Among them are: #1 Local underwriting committees typically respond quicker to loan application files than their nationally based counterparts.   #2.  Local underwriting committees can can factor in local issues and nuances to properly assess a loan application.  An example of this would be a business located generally in a zip code that is not performing well, but perhaps it’s immediate neighborhood is performing well.  The nationally based underwriting committee looking at the zip code data is more likely to say no.

Is your bank representative directly connected to the Underwriters?

Not only is it important to have a local underwriting committee, but it is also important to ask and find out how many people are in between the bank representative who is working with you and the underwriting committee.  How this matters is that the more people in between you and the underwriting committee, the more in the dark you are going to be.  If your bank representative has one or more people in between him and underwriting, then it is going to be harder for him/her to get proper updates on what the underwriting committee is thinking, since the information is going to be filtered.  This is where working with a local community bank can be a smart move, as you are likely to be working with the direct liaison to the underwriting committee.

Which industries does the bank like to keep in its portfolio?

This is an important question to ask when applying for Lines of Credit & SBA Loans for your business, because you need to know if the bank likes to lend to the industry that your business is a part of.  ‘In a bank’s portfolio’ means loans that are still on the bank’s books.  This would be all the loans that the bank has written that have not been sold off on the secondary market.  Banks will usually avoid lending to industries that it perceives as high risk.  Also, banks will avoid offering financing and writing further loans to industries in which they have had a high failure rate of loans in the recent past.  For example, if the bank has had too many loans to franchise restaurants go bad, then they will be reluctant to approve a loan or other financing for another franchise restaurant owner, EVEN IF, the numbers all check out.   So, make sure to find out if the bank has a good or bad history with the Industry your business is a part of.  If the bank has a bad history of lending to your industry, then look for another bank.  This is where having your bank representative as close as possible to the underwriting committee helps, as you are more likely to find this out sooner than later.

For assistance with selecting a bank to obtain financing, lines of credit or other business loans for your business contact our office.  You can reach our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com