To assist you in your financial journey, we’ve put together a comprehensive FAQ guide that addresses common questions and provides valuable resources. Whether you’re exploring the world of business financing or seeking to understand financial terms, our FAQ page is here to help.
Please feel free to explore the questions and answers below, and if you have any additional inquiries or require further assistance, our dedicated team of experts is just a phone call or email away.
Do I need a loan?
If you don’t have enough cash to cover monthly operating expenses, equipment purchases, or growth opportunities, a loan may be a viable solution.
What type of business loan do I need?
The type of loan you need depends on your specific requirements. If you need cash for operating expenses, a line of credit is usually best. If you require a one-time cash injection for equipment or a business vehicle, a term loan may be the better choice.
How does a business line of credit work?
A line of credit is revolving, allowing you to advance and repay funds as needed. You pay monthly accrued interest, and there’s no payment when there’s no balance. A line of credit usually has a 12-month maturity and can be renewed at maturity for continued use.
How does a business term loan work?
A term loan provides a set amount of funds upfront, with fixed monthly payments over the loan term.
What payment options do I have?
Business loans typically have monthly payment obligations. A line of credit has interest-only payments, while a term loan features fixed principal and interest payments.
What do I need to apply for a loan?
You’ll need some basic business and personal financial information to submit an application. Review our Loan Checklist for more details.
Can I apply online?
Yes! OPB accepts online loan applications for lines of credit and term loan amounts up to $250,000 and up to $350,000 for owner occupied commercial real estate.
Why do you need my personal guarantee?
It is a common practice that all business owners provide a personal guarantee. Providing a personal guarantee means that if the business becomes unable to repay the debt, the individual assumes personal responsibility for the balance.
How large of a line of credit do I need?
A general rule of thumb is that a line of credit should be around 10% of your annual revenues.
Why can’t I just use a business credit card?
You can use a business credit card, but it may have higher interest rates than a business line of credit. Credit cards can be suitable for employee purchases and rewards.
Why is it called a working capital line of credit?
Working capital lines of credit are designed to address short-term operational needs and maintain liquidity.
What is working capital? Is it cash?
Working capital is not cash alone. It’s the amount left after subtracting current liabilities from current assets, reflecting your business’s operational efficiency.
Why is working capital important?
Working capital is vital for day-to-day operations, growth, and resilience. It affects liquidity, debt payments, and growth potential.
Will I have a payment on my line of credit if it doesn’t have a balance?
No, you only pay monthly interest on the balance of your line of credit. If it’s at a zero balance, no interest will accrue.
What is evaluated when making a credit decision?
Credit decisions consider personal/guarantor credit history, business credit history, years in business, financial trends, debt service coverage, leverage, payment history, industry type, guarantor strength, overdraft history, collateral, etc.
What is cash flow and how is it measured?
Cash flow is the movement of money into and out of your business and it’s measured by tracking that movement. The timing of cash flows is crucial for your business operations. If more cash is going out than coming in, it may result in a cash flow deficit, making it challenging to pay suppliers, employees, and more. A revolving line of credit can help bridge these cash flow gaps until you receive cash, such as payments from accounts receivable.
Is profit the same as cash?
No, a company can show a profit on the Income Statement but have no cash in the bank. For example, you may have sold inventory and recorded the sale, but you haven’t received payment yet. This results in a profit on your Income Statement but no cash on your Balance Sheet.
What kind of collateral is required for a working capital line of credit?
Working capital lines of credit are generally required to be secured by a blanket lien on general business assets. Other collateral may be considered. Reach out to us here.
What kind of collateral is required for a term loan?
Term loans are generally secured by equipment or vehicles. They may be secured by a blanket lien on general business assets. Other collateral may be considered. Reach out to us here.
What if I don’t have any collateral to offer?
Please reach out to us by contacting one of our local Commercial Relationship Managers to discuss your options.
Will you pull my personal credit report?
Yes. We will pull credit on all individual borrowers and guarantors. We use the report to evaluate consumer credit history to help determine the level of risk associated with lending to that consumer and their history of credit repayment.
How long will it take to get my loan funds?
The time to access loan funds varies depending on complexity. Factors such as type of loan, type of collateral and the speed of documentation back and forth can affect the overall timeline. Our goal is to get you access to your loan funds as quickly as possible.
What is a prepayment penalty? Does my loan have one?
A prepayment penalty is a fee that some lenders charge when you pay all or part of your loan balance off early, prior to maturity. Generally, commercial real estate loans will have a prepayment penalty, but all loans can have them.
What is the difference between Owner Occupied and Non-Owner Occupied real estate?
Owner Occupied commercial real estate requires occupancy by the borrower or guarantor. SBA guidelines require at least 51% of total square footage occupancy to be considered Owner Occupied. Non-owner Occupied real estate is either investment property or occupied less than 50% by the borrower or guarantor.
Can I apply for a loan if I haven’t been in business and owner for two or more years?
Yes, please reach out to us by contacting one of our local Commercial Relationship Managers to discuss your options.
Do I need to have an Oregon Pacific Bank account to apply for a loan?
No, you can apply without having an OPB account, but we pride ourselves on our relationship-based banking and would like the opportunity to visit with you about deposit accounts and other banking solutions.
What is the benefit of a local community bank?
Local banks offer personalized service, local decision-making, and a deeper understanding of your community’s needs.
Terms to Know: leverage, working capital, loan term, amortization, net worth, assets, liabilities, revolving, business assets, interest only, fixed payment, variable rate, refinance, owner-occupied, non-owner occupied, LTV (Loan to Value), unsecured, accrued, operating expenses.
*Please see your local Commercial Relationship Manager for information on current rates, terms, and additional information
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