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What will my lender need from me to evaluate a business loan request?

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Business Lending Q&A

  • Business Profile: scope of business, annual sales, number of employees, essentially anything that highlights your business. What makes your business different from your competitors? What are your competitive advantages?
  • Purpose of the loan: What will the loan proceeds be used for? For Example: we want to renovate the unused upstairs of our location into a 2 bed room apartment and rent it for $800 per month. Or I want to buy a larger building for my growing business? I need to expand my current building and need funds for the expansion.
  • How much will you need to borrow: That is usually determined by the cost of the property you are acquiring (sales price) and/or the renovation cost of your project. In some cases it can actually be a purchase and a renovation in the same loan. Renovation projects will require bids from a licensed contractor.
  • What type of loan are you interested in? Is it a term loan with a set payment or will this be a line of credit where the payment is tied to the amount on the credit line outstanding? Will you be needing the proceeds all at once (set payment, term loan). What are the advantages and disadvantages of each loan type?
  • What type of financial statements will be required? 3 years of personal and business tax returns., current profit and loss and balance sheet, current personal financial statement, 2 months of business tax returns.
  • How will this loan impact my future business cash flow? Does this new business expense make sense long term? How will it affect the future of my business?
  • Do I have the minimum down payment requirement of 20% on this project? If not; what lendable assets can I pledge and will this additional loan request create a hardship on my new proposed cash flow?
  • What collateral will be used to secure the loan request? For the most part, NCCFCU is a bricks and mortar lender. This simply means that we prefer to use real estate as collateral for loan requests. We typically handle owner occupied business loan requests where the business owner operates his/her business out of the property that has been pledged for collateral. We do also entertain non owner- occupied loan requests; where property is acquired for the purpose of leasing to business tenants or residential tenants (apartments).  
  • What are the current interest rates and loan terms? All loan interest rates will be underwritten based on credit, collateral, financial capacity, etc. Each case is different. All member business loans are based on prime rate and the pricing is adjusted accordingly as it relates to credit score, collateral, cash flow, etc .  Most loans have a term of 3-5 years with an amortization period of up to 20 years.
  • Does NCCFCU do loans on start-up businesses? We do not do loans for start-up businesses.
  • How long do I have to be in business to be considered for a member business loan? A minimum of 2 years in business and 2 years of financial history

Every business loan request is different. The above items are simply a starting point to help get you engaged in the thought process of putting pencil to paper to see if the loan request does make sense for the long-term viability of your business.  If you need assistance in understanding the process or would like to schedule an appointment to discuss your situation please feel free to contact us.

For more information, reach out to Chuck Waller, Member Business Relationship Officer at 919.736.5091 or cwaller@www.nccfcu.org