Applying for business financing can help ensure you have the resources to build your organization over time. It’s important to carefully plan and consider this process before you meet with a lender. And so, within our latest post, we’re presenting six questions you should ask when applying for business financing.
1. What would I use the capital for?
When going into the meeting with your lender, you should know exactly what you’re asking for and what you will be doing with the money. Will you be buying new equipment? Will you use the money to invest in new hires for the organization? Make sure that you have all the facts and the figures in front of you and that you have a clear understanding on how the resources will be allocated.
2. Does my credit profile match my needs?
When reviewing your financing requirements your lender will look at your credit profile and determine whether you have the requisite profile to receive the money you need. One of the challenges many business owners face is that they haven’t built a reputation with the lender and then the lender doesn’t have the needed data to help them with their financing needs. It’s important to review your credit profile closely in the months leading up to your meeting with lenders to ensure you remain a viable lending candidate.
3. How quickly are the funds required?
Make sure that you have a timeline for the required resources and that your timeline is similar to the estimates from the lender. If you don’t have this information you could find that you have a budgetary shortfall that must be managed. In some cases, you’ll need the extra financing within just a few weeks. For example, you may require the money to meet manufacturing demand for a new customer. It’s important that your lender has this information and is able to judge your ability to pay back the loan based on this data.
4. What is the payment schedule?
When considering a lending offer from your lender, you should first review the payment schedule and determine whether you’re able to fit your payments within this schedule. Carefully consider how the payment schedule might impact your business and your business flexibility in the coming months. Ask about penalties for missing payments when reviewing the schedule with your lender.
5. How long will the loan application take?
This is another element to consider when reviewing the timeline for the loan. If you need financial resources in a set period of time it’s important that you understand the loan process and how long the loan application will take. Work with your lender to go over the process in detail and then ask them about what you can do to reduce the time it takes to receive the loan.
6. Do you report to the business credit bureaus?
In some cases, you might find that your data and your credit information is reported to the business credit bureaus. This information can then be used by lenders in the future to determine your credit worthiness. In most cases, it’s valuable to have this level of reporting because it shows your company to be in good standing with a strong credit history. But it’s always important to check what happens with your business data when it’s being used by lenders.
Make sure you have a clear understanding on the business financing process when seeking financial resources for your business. Talk to lenders in your area about your options and consider the questions in this post before booking a direct meeting.