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