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.
QUESTIONS TO ASK YOUR LENDER
- Have you ever approved a loan for my type of business?
- What is your average loan amount for a business 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?
- Does the loan have a prepayment penalty?
- What additional fees will I need to pay?
- When does the loan need to be paid in full?
QUESTIONS YOUR LENDER MAY ASK
- How much money do you need?
- What does your credit profile look like?
- How will you use the money?
- How will you repay the loan?
- Is your business’ cash flow greater than the debt you will take on?
- Does your business have the ability to make the payments required under the loan?
- Can you put up any collateral?
- Is your collateral sufficient to pay the loan in the event you need a backup source of loan repayment?
- Does your business have a profitable operating history?
- Does your business control its own inventory and expenses?
- Are your sales growing?
- Are your profits increasing as a percentage of your sales?
- What is the future of your industry?
- Who is your competition, and what are their strengths and weaknesses?
- Does your business collect and pay bills?
- Are all business officers committed to the business?
- Does your business match sources and uses of funds?
- Do you have discretionary cash flow?