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Good Answers

By Cynthia E. Griffin

Before getting a bank loan, you'll have to face plenty of tough questions from your banker. Here, George Falconero, a partner in Oaks, Pennsylvania, CPA firm Maillie, Falconiero & Co. LLP, offers the best answers to the three toughest questions you'll be asked:

Why do you want to borrow money instead of using your personal resources?

Answer: "My personal funds will be a reserve in the event my business experiences hiccups. I want to be in a position to devote my resources to the business without worrying about arranging financing for ups and downs."

What is the basis of your financial projections?

If you are relying on competitors' information, have a market study you don't want to get out to the competition, or are using your own best estimates, this may be a problem, says Falconero.

"Handling this question is a matter of presentation. If you don't want to reveal your source or are relying on a best estimate [as are most small businesses], highlight your experience in the industry and your business knowledge."

Why don't you finance the project in parts?

Be honest. Say it's probably not worth your efforts to do the project on a piecemeal basis and that you really want to work with a lender willing to support the project 100 percent.

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