Taking out a business loan is a major financial decision. Finding the right lender–as well as the right loan–is critical for ensuring that you’re getting everything you need out of a financial solution. There are several important questions that you should ask when vetting a potential lender, especially when considering a loan for your business.
The list is divided into two sections. The first is product questions, where you’ll learn more about the quality of the loan. The second is process questions, where you’ll be able to tell how your potential lender will handle your solution.
All loan products are not created equal. Understanding fundamental components and smaller nuances of the financial solution you’re being offered can help you evaluate the quality of the loan.
1. Do you offer fixed rate loans?
This will help you determine if your interest rate will stay consistent throughout the life of your loan or if that rate will be variable– fluctuating based on market conditions.
2. Is personal collateral required?
Some lenders require that you secure your business loan with personal collateral. Examining the details of this requirement can help you calculate the real impact of your loan.
3. What is your maximum term loan?
Longer payment terms typically mean that your monthly payment will be lower and more manageable. At BHG Financial, we make it easy to see how affordable your goals can be. Estimate your payment in as few as 30 seconds by using our Payment Estimator below.
Understanding how a lender operates can be just as important as the product they offer. Digging into expertise, deliverables, and expectations around timelines can decrease chances of surprises once you’re into the loan process.
4. Will applying for this loan affect my credit?
Many lenders will do a hard pull on your personal credit when you’re applying for business financing. A hard pull is a request to look at your credit file to determine how much risk you pose as a borrower. It can lower your credit rating and stay on your credit report for up to two years.
5. What factors do you consider in a loan application?
When determining your eligibility, some lenders will use a standard equation based on static and narrow criteria (think FICO score and income alone). Others may create a more holistic profile for you, based on specifics about your profession, earning potential, and more, weighted according to historical data.
6. How quickly can I expect an approval decision regarding my application?
Establishing a lender’s approval timeline can help you set expectations on whether your loan process will take days, weeks, or even months.
7. How quickly will I get funds if approved?
Some lenders can take weeks to deposit funds into your account after you’re approved, while others can do so in a few days.
8. What experience do you have working with financial profiles like mine?
Lenders with expertise in lending to a specific workforce sector or type of customer may be better able to serve your unique needs. They may also have a more streamlined process.
Want to see how our financial solutions are customized for professionals like you? Contact our team at 866.280.5476 or use our Payment Estimator below today.