CSB Bancorp Inc.

11/26/2021 | Press release | Archived content

8 Questions You Should Ask Your Business Banker

You put together your business plan. Now you need to seek financing to make your plan a reality. Next step - meet with a business banker.

However, before you have this meeting, you will want to have a list of questions to ask your business banker. Particularly, you will want to investigate what type of loan will help you move your business forward. If your plan calls for a building, you many have a construction loan need. If you have an existing building, you may have a long-term loan need. And you may have a need for expenses paid, or financing inventory which is a working capital need.

Here are 8 questions you will want to ask your business banker when you meet:

1. Is the bank really prepared to meet your lending needs?

If you needed money today, is it available to you and your business? A key question every business owner will want to ask his or her lender. Make sure you investigate how solid the bank is before you consider doing business with them.

2. Does the bank have any questions about my character?

Any smart banker will examine your character as a client to answer the question: If the borrower has the money to repay the loan, will he or she? What can you do to show a bank that you're trustworthy? Having an established and consistent repayment history, a solid credit history, and compelling references will all display trust. You'll also want to provide names of key customers and suppliers who can testify to your trustworthiness.

3. Does the bank understand my reason for borrowing?

You want to make sure your bank knows what business you're in and why you need money. Be precise when talking to your banker about specific loan needs. Don't just say you need a commercial line of credit to make payroll or for expenses. Explain why you need the loan.

4. Am I asking for a reasonable amount of money?

You don't want to find yourself in a situation where you've borrowed just enough for today's needs, but not enough to finance your company's future growth opportunities. Your banker will want to go over your possible future needs with you.

5. What is my current cash position?

The primary source of repayment is always cash flow from your business. So, if your banker wants more specifics, you will need to provide them with projections along with the reasons/facts behind them.

6. What are the risks to my loan repayment?

There are financial risks that vary by industry, company size, and company structure. Your banker will help you pinpoint the risks you face and assess where you stand.

7. Does the business banker think my company's financials are strong?

As a business owner, you've probably provided your bank with a lot of financial information. The banker is going to look at the quality and accuracy of your records, whether you work with a seasoned CPA, and if your financial documents are presented clearly in order to proceed with your request.

8. Does the bank trust me?

Cultivate a reputation for honesty and integrity with your banker. You need to be willing to tell your business the whole truth, both your business successes and shortfalls so they have the big picture. Without this information, a business banker is unable to determine the best course of action or recommend the various types of business loans that will suit your needs.

Learn more from our business loan experts at Chelsea State Bank. Contact our Loan Office today.