Before applying for a business loan, you need the facts. You must ask these questions to ensure a good fit and experience.
1. What Type of Loan Is Best for Your Needs?
Lenders will interview to try to get a better understanding of your business’s financial needs. They will then act as your advisor and provide several loan options, along with the positives and negatives of each one. Some options that could be best for your business include credit cards, loans, mortgages, and credit lines.
Can You Apply Online?
If you enjoy the hassle-free convenience of online applications, ask if there is a digital option. However, if you choose this application option, ensure you get a checklist of all the documents you need to provide to your lender so you can submit these the first time.
3. What Do You Need To Apply?
While shopping for lenders, you will probably notice that some demand more documents than others. For example, most will require a credit inquiry, but only some will ask for tax documents. However, if they need audited financial statements from a CPA, you must include this cost when considering working with a lender. Other than that, you may have to provide a range of legal documents and your business plan.
4. What Is the Average Time To Receive Funds After Applying?
Before applying, read a Quickbridge review and identify how long it will take to receive your funds. Of course, having everything ready for your application at the start will help speed things along, but if time is of the essence, see how quickly you will get your funds and if you can do anything to get your funds faster.
5. What Rates Are Typical?
Without a credit inquiry, it can be challenging for a lender to tell you your rate. However, if you have your business and personal credit score handy, you can get the typical rates for that credit score, loan amount, and type. When shopping for a lender, ensure they all give you an estimate in APR to make comparisons easier.
6. Does the Loan Have a One-Time or Annual Fee?
You may have extra costs associated with your loan. To avoid surprise fees, ask about annual and one-time fees while still shopping to compare offers accurately.
7. How Can You Lower the Interest You Must Pay?
Lenders often have methods for lowering interest rates. Some examples of incentives include opening up a business checking account with that bank or signing up for automatic loan payments.
8. Do You Need a Personal Guarantee?
Personal guarantees mean you would be liable for repaying the loan if you shut your business down, which is standard for small business loans. Otherwise, lenders can use your assets or put a lien on your business as collateral. So make sure you ask about collateral and if you must provide a personal loan guarantee.
9. Do You Get Ongoing Support?
It is wise to choose a lender that allows you to change your loan as your business grows. When a lender offers ongoing support, it can make it easier to navigate substantial growth, transition your business to another party, or handle times of economic stress. This can make your loan experience much more straightforward.
10. What Is the Loan Modification Process?
The ups and downs of running a business can prompt you to change your loan. Therefore, you should ask your lender about this process and consider ease of modification in your final decision.
11. Is the Lender SBA-Preferred?
Loans guaranteed by the Small Business Association open up more opportunities for a business but require extra steps during the application process. In addition, SBA-preferred lenders can make decisions for SBA-guaranteed loans. That can reduce the time it takes you to get your funds.
Make sure you take the time to do your research before agreeing to a small business loan. That ensures you are informed and can make the best decision for your business.
