The small business loan application process is a lengthy and complicated one. That’s why you need to make sure you ask the right questions ahead of time.
1. How much money do I need?
Always carefully calculate how much money you need before you apply for a loan. Running out of money or ending up with too much money are both not ideal situations. A helpful method is creating a spreadsheet of all the expenses you’ll need money for—from rent to equipment to payroll. Then apply for more, because inevitably unexpected costs will arise.
2. How long do I have to repay the loan?
Different lending institutions have different repayment terms. Make sure you fully understand the payment increments, payment schedule, and loan term. Know what the punishment is if you miss a repayment or two.
3. Do I need collateral?
Some types of loans require collateral, and others don’t. Many individuals do not like using their own belongings as collateral, but some people need to in order to qualify for a loan. Make sure you understand the lending institution’s policy on using collateral to back up your loan.
4. What is the interest rate on the loan?
The worse your credit history is, the higher your interest rate will be. Certain types of loans, like merchant cash advances, have especially high interest rates because their requirements of the borrower are less strict. Of course, everyone prefers as low a rate as possible. Make sure you know what your interest rate is, and if it’s a bit high, make sure you know why.
If you have further questions regarding loan applications and interest rates on small business loans, visit https://www.biz2credit.com.