Ask the right questions
Before you walk into a bank or apply online, it’s important that you’re prepared to have the important conversations that will help you secure financing for your small business. Here are a few questions you might want to consider ahead of your big chat.
About the Lender:
-
Have you ever approved a loan for my type of business?
-
What is your average loan amount for a business of my size?
-
Who approves or denies the loan application?
-
How long does the application process take?
-
Do you require a personal guarantee?
-
How quickly can you provide the approved funds?
-
How much can I borrow based on the asset I’m using for collateral?
-
What deadlines will be imposed on me to accept my loan offer?
-
Will you report my loan repayment information to major credit bureaus so I can build my business credit?
-
Will you report positive as well as negative information?
-
-
If I am unable to repay, how will you try and collect on the loan?
About the Loan:
-
What is the annualized percentage rate or APR?
-
What additional fees will I need to pay?
-
Are they included in the interest rate quoted?
-
What are their payment amounts and frequency?
-
-
What is the full cost of the loan over its lifetime?
-
When does the loan need to be paid in full?
-
Does the loan have a prepayment penalty?
-
If so, what is the prepayment cost?
-
-
If I take a second loan with you in the future, will I need to pay any financing charges on the existing principal of my previous loan?
If Working with a Broker:
-
What is the annualized percentage rate or APR of each option you are presenting?
-
What will you, the broker, be paid for each option?
-
Do you make more money if I take certain loans?
-
-
Do you get paid by me or by the lender?
-
Can I see an overall summary of what types of loans borrowers who work with you end up with?
-
What’s the average interest rate?
-
How many take a bank loan, medium-term online loan, or merchant cash advance or short-term loan?
-
For more information about the Borrowers’ Bill of Rights, including additional questions to consider, visit http://www.responsiblebusinesslending.org