The preparation for a loan interview at the bank, whether it is a start-up loan or property loan that you need, is an important matter for the success of your project.
Hopefully the following loan interview advice, which we have compiled from many different sources, will help you get the loan you need. Please do not hesitate to contact us if you need to write a business plan or need help calculating financial plans.
1: Equity is king
2: Documents required for finance interview
3: Checklist to prepare for the bank interview
4: Know all alternatives and options
5: Compare the cost of borrowing from various different establishments
6: Get documents and information from the banker before the interview
7: Take notes during the discussion
8: The (credit bureau) credit report for the loan interview
9: Know your loan demands very well
10: Observe the lead times before the lending
11: The importance of appearance at a loan interview
12: Build confidence during the loan interview
13. Role play loan interview
14: Finance interview agenda
15: Warning against high owner’s draws
16: Do not provide too much collateral
17: Take advantage of interest options
18: Know your personal debt limit
19. Request date for the loan interview professionally
20: Make what you cannot hide clear at the beginning
21: Role switch – what would your bank interview questions be?
22: Go to the interview with your team where possible
23: Punctuality and other loan interview considerations
Bank Interview Tip Number 1: Equity Is King
If you have at least 20% of the required amount of funding as equity, you stand a much better chance of getting the loan. The logic here is simple – if you can prove that you will back your project with your own money, this means you will be very careful with your creditors’ money.
Preparing For Your Loan Interview 2: Documents Required For The Finance Interview
There are a number of important documents that the bank may require for the loan interview depending on your project:
- Identity documents, registration certificate
- Remuneration statements, tax returns, budgets and assessments (economic evaluation documents), SCHUFA credit report
- Insurance policies, evidence of fund transfers (pensions) and other documents that shed more light on your financial status
- If the project primarily involves a property, a machine or something else with tangible value, the bank will usually require documents such as plans, approvals, calculations, descriptions, photographs and other evidence.
- A business plan, financial plan, and (where possible) a certificate of registration, a company/partnership agreement and a resume are usually required for start-ups.
This is a lot of documents, which is why you should…
3: Make A Checklist To Help Prepare For The Bank Interview
People make checklists for all important things in life. Your financing interview is important enough to merit a checklist. We’ve created a bank interview checklist for you here. Click on this link, print it and hang it up in your study (this also goes for other checklists and to-do-lists).
Bank Interview Tip 4: Know All Your Alternatives And Options
As the founder of a promising new enterprise, you shouldn’t be pleading for a loan – you’re selling your bank an attractive investment opportunity! You should know all your options and also check if you are eligible for government subsidies. We have summarized the most important articles on the topic on this site, namely state funding opportunities and a list of banks that give start-up loans. If you know all of your options and alternatives, you will also find it easier to see if your bank makes a good or not so good offer. The banking interview questions are key to this.
Loan Interview Tip 5: Compare The Cost Of Borrowing From Various Establishments
A loan calculator (download loan calculator here) will let you see how expensive the loan will actually turn out to be. Of course, you must also take into account factors such as repayment rights and other loan details. Ultimately it’s very important for you as a borrower to figure out your exact costs and expenses.
6: Get Documents And Information From The Banker Before The Interview
You should be aware of all the key figures for the loan before the loan interview. Therefore, make sure that you have obtained all the loan documents from your banker or other contact person. It is important that you have a full set of documents and that you be able to go quickly through the frequently very extensive, fine-print loan terms and conditions. Ideally, you should be so well-prepared for the finance interview questions so as to be ready to sign at once.
Loan Interview Tip 7: Take Notes During The Discussion
Sometimes banks make offers which they later backtrack on because they were just bait. This is why you should make sure that all terms be confirmed in writing and take notes. If you have good negotiating skills, you’ll be guaranteed success.
8: Credit Bureau Report For The Loan Interview
If you’re trying to get a credit report for the bank interview, particularly when you want to secure project financing for a property, it is very important that the loan officer label the request “loan conditions” instead of just “loan”. Otherwise the loan applications will pile up and this can affect your credit report adversely.
Bank Interview Questions Tip 9: Know Your Loan Demands Very Well
You’re going to have just one shot to name your price. If you demand too much or too little, you’ll seem a little disorganized. Establish a good financial plan (please look at our financial plan templates) before you contact a loan consultant. On this note, please take a long, hard look at the liquidity and cash flow analyses – they’re often not very clear to founders.
Bank Interview Questions Tip 10: Observe The Lead Times Before The Lending
The lead time can be as long as several weeks. When you’re applying right when you need the money you’ll seem desperate during the financial interview. You’ll also seem less convincing, and this is not a good sign of your entrepreneurship qualities for the bank. Apply on time!
Applying For A Loan Tip 11: The Importance Of Appearance At A Loan Interview
Be careful what you wear to the loan interview, depending on what your project is. Especially if you plan on founding a company, take the time to choose a good business outfit. Wear good, presentable clothes and look in the mirror before you leave to check if you have food left between the teeth or other put-offs, which could leave a bad impression.
Bank Interview Tip 12: Build Confidence During The Loan Interview
If there is an interesting story behind your projects or some factors of human interest (of course remain within professional limits), which you could use to enhance your creditability and good judgment, go ahead and say a few words about them. Sometimes a little small talk is a good lead into finance interview questions. If you want to look relaxed and trustworthy, it may be a good idea to practice the interview in advance.
Bank Interview Tip 13: Role Play The Loan Interview
It might be fun to make a friend or relative to play the moody, over-sceptical loan provider to polish your skills as a competent loan recipient. The sad truth is that many loan providers don’t give your project as much time as it should get before the interview. This is especially true for small- and medium-size loans, where the banker across from you doesn’t understand your plans any better than your friend. Your interview partner will have a list of bank interview questions he’ll ask you. He should also have his own ideas and questions to raise.
Agenda Of The Financing Interview: Loan Interview Tip 14
Your agenda should vary depending on which bank you’re going to, because the situation is going to be different in each case where the interview is concerned. However, always have your list of bank interview questions with you. Some ideas in our body of knowledge: The loan recipient’s agenda at the financing interview
Loan Interview Tip 15: Warning Against High Owner’s Draws
If you had very high private drawings in your income statement the previous year, prepare for some pointed questions in this direction. Your partner shouldn’t be left with the impression that you have lived or are currently living beyond your means.
Bank Interview Tip 16: Do Not Provide Too Much Collateral
Declaration of collateral is a very important part of the finance interview. Do not sacrifice the bulk of your assets to the bank. Keep your powder dry, even if you have to apply for a bridge loan from another institution in the event of unforeseen extra financial needs. Having to deal with asset encumbrance will complicate the rapid acquisition of additional loans, perhaps even such required for survival.
Get A Loan Tip 17: Take Advantage Of Interest Options
Interest rates were at record lows in 2015. There is a lot of money to be saved depending on your project. Loan candidates have more wiggle room even for small and medium loans, because banks are trying to loan at the most profitable rate.
Loan Interview Tip 18: Know Your Personal Debt Limit
If you want to avoid being strained, you should figure out from your financial planning calculations or accounts how much money you can spend to service loans monthly. This is also referred to as debt service limit. This budget line shows you at a glance how close you are to the limit. A particularly high debt limit is also a great argument at the loan interview.
Bank Interview Tip 19: Request The Date For The Loan Interview Professionally
Approach the loan consultant professionally by asking your bank consultant for a number or an e-mail. Contact the consultant at least one week before the interview is set to take place. Even better, give him more time, especially if the interview is in the middle or the end of the year. Pay attention to spelling in your mail and present yourself professionally on the phone. Keep it short and to-the-point. You will have more time to exchange information as soon as the bank starts processing your case.
Tip 20: Make What You Cannot Hide Clear At The Beginning
Nowadays, there are limited opportunities to conceal the situation of the borrower, at least in the financial areas. If you have other financing, were unemployed, have gone bankrupt or max out your credit card frequently, you should play with open cards. You will find skilful interpretation makes it nonetheless possible to bring these things in line with the notion of a promising borrower, even in case of a venture capital interview (VC interview).
This important tip also applies in other areas where the issue is not the bank’s perception, but rather the analytical competencies of your loan officer. Let’s say you have not given your legal form a thought. Don’t try to make excuses. Be professional- for example you can say that you still need to consult with your tax advisor on this issue or ask the loan officer what his or her experience is. If you are otherwise well-prepared, minor knowledge gaps will be forgiven.
Loan Interview Tip 21: Role Switch – What Would Your Bank Interview Questions Be?
Imagine yourself in your loan officer’s place. What would your bank interview questions be if you wanted to make sure you have a trustworthy borrower sitting across from you? How would you try to sell the loan for as much as possible? Dealing with these two issues well will enable you to insist on and obtain the best loan terms.
Bank Interview Tip 22: Go To The Interview With Your Team Where Possible
If you need start-up financing, where there will be more than one partner or manager, then take as many of your team members as possible to the loan interview. Perhaps all of the partners could show up depending on how many there are. If there are too many stakeholders, you could take just those who are most active in financing and management. Loan providers will appreciate seeing the most important representatives of the enterprise in person.
Loan Interview Tip 23: Punctuality And Other Loan Interview Considerations
Gut feeling plays an important role in fruitful loan interviews. You should take care to avoid common pitfalls in terms of normal social interaction. Know your numbers, turn your cell phone on silent, always let the officer finish talking before you say something, look him or her in the eye and be careful about all those little signs that show you respect the person, that you are confident and attentive. Be very punctual and make sure all the important points are discussed during the loan interview in the time available.
We hope you found this list of tips and advice for planning your bank interview helpful. If you have any questions or would like a quick, free check of your documents and business plan, do not hesitate to contact us.
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