4 of Your Biggest Business Loan Questions Answered
by Tom Sposito II, Chief Banking Officer
Your business is life-changing. It’s creating new opportunities for you and providing a service or product customers need.
Whether you need a business loan to start a new company or expand your current one, the money you’re approved for will alter the course of your future. At Traditions Bank, we understand the importance of a business loan. We also understand how overwhelming the entire process can be for owners.
We’re here to put an end to the misconceptions and empower you to make the best financial decisions for the future of your company.
Discover the top four business loan questions and the answers you need to know:
1. How do I start the business loan process?
When you think about the process as a whole, it quickly feels like a heavy burden. Take a step back. Remember, you’re the leader of your vision and you know exactly why you want to take this leap.
Start there. Put your thoughts together in a proposal, answering these critical questions:
- Why do you want to move forward with your business idea?
- What do you believe will make this a successful venture?
- How do you plan to pay the loan back?
- Who is your competition and how will you stand out from them?
- What other research have you done to prepare and ensure this will be a successful business opportunity?
- What is your vision and mission?
- What are your credentials?
This will be your first of many conversations. A dedicated business loan advisor will have plenty of questions to ask after your initial meeting to help shape your borrowing strategy.
2. Is it important for me to know the exact amount I need to borrow?
You should have a starting point in your mind. However, your estimate doesn’t have to be a definitive number. Much like personal loans, your business loan journey will be unique. While some business owners are purchasing a property with a stated price, others are going through a more complex process.
Discuss financial projections with your business loan advisor. On one hand, this lets them know that you’ve given the future rigorous thought. It also ensures they properly understand the nature of your business and help structure it effectively to get you what you need.
3. How do I know what payments I can afford?
It’s crucial for you to determine the affordability of your business plan. For example, will you continue your day job? Will it be your sole source of income? Or will you buy the business and hire someone else to run it?
Additionally, consider your personal financial condition, including the reserves you have in cash and securities and how much of your personal income you’re willing to put into the business. Understanding your own risk tolerance will ensure your business plans are viable and realistic.
We, of course, are rooting for you to succeed – and you’re dedicated to your vision. Unfortunately, no plan is fool proof. Taking a critical look at your financial status will help you become a great owner. One who is prepared to bob and weave with the unknowns of owning a business.
4. What’s the difference between an online and a local lender?
Financial apps have grown to become incredible resources. As an owner, you should explore the options and find ones that will help you manage and grow.
However, when it comes to online lending options, you don’t get the give and take of human interactions like you do with a local lender. Traditions Bank is focused on consumers and small and medium-sized businesses. Don’t believe it when you hear banks don’t want to lend money. We’re eager to lend money because we have a culture of caring – we’re here to help you succeed in any way we can.
That’s why during the COVID-19 pandemic, we continued to write over 300 small business loans. We’re proud to report that those businesses are still running today.
Owning a business is complicated. The good news is that you’re not alone. Our trusted business loan advisors are here to guide you through the process and ensure you’re on the right financial path.