What you need to ask when applying for a business loan
Business loans can often be complex and very daunting. There is so much information to take in and some of it you may not know about. Before applying for a business loan, it is recommended to prepare a few questions to ask, just to make the process a lot easier.
- The Specific Terms of the Loan
Before finally agreeing on the price, it can be easy for both parties to misunderstand the final terms. Ask for a recap of the terms, how long you will have until you need to pay it back, minimal payments and exact dates of these payments. Also find out if you can set up an automatic payment from your business account. Ensuring you have these basic details defined and understood will save you hassle.
- Likelihood of Approval
Understanding how the bank approves loans is always an advantage. Once you find out the requirements, you can prepare yourself in the eventuality of being questioned about credit scores.
- Does business experience factor into the risk equation?
Business experience can help in the credit decision. In the end, the decision will lie on your credit score, collateral and cash flow. If you do not have any of these, then the experience will not make a difference.
- What happens if a default occurs?
Knowing the ramifications if a default occurs will help you prepare in the event that situation happens. Emphasise that you do not foresee a problem, but it is better to know how long a payment can be overdue before the bank starts to collect. Ask them what happens in the event of a missed payment.
- Who do I contact for further questions?
This is always important to know. The representatives selling you the loan might not be your point of contact. Get the contact details for future questions.
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