When business owners need cash to invest in new equipment or fund a product launch, it’s only natural to apply for a business loan. What many don’t understand is that not all loan offers are the same. Even if you don’t have the best credit right now, it pays to ask a few questions before signing anything. Here are five questions that need answers before you move ahead with the loan contract.
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Is the Loan Amount Enough?
You’ve already done the math before, but do it one more time before accepting the offer. The amount approved by the lender needs to be sufficient to cover all the expenses associated with the project you have in mind. Is there anything you’ve overlooked? What would happen to the project if you did come up a little short on cash? Only proceed if you are sure the loan will fill the need.
Is the Loan Too Much?
There are lenders who set minimum amounts they will loan. While it may seem fine at first glance to get more cash than you need, think long and hard before accepting the offer. That larger amount is attractive, but it also means more to pay back in the way of a principal and interest. Could that create problems for you and your company later? If so, it would be a good idea to turn to a lender who will approve what you need and not a penny more.
When Is the First Payment Due?
How much time do you have before the first installment payment must be remitted? Can you set aside the funds for that payment in time without having to stall one of your other creditors? You’ll find that even lenders who specialize in bad credit business loans are willing to work with clients who need a certain amount of time to prepare for that first payment.
Are the Terms and Conditions Reasonable?
Along with the APR, do you find anything else in the terms and conditions that needs to be discussed? For example, what would happen if you were able to retire the loan early? Would the lender assess some type of fee for early settlement or would you end up saving money on the interest? Try to look at each provision and project what would happen if certain events came to pass. If you feel the terms are equitable and fair, that loan offer is worth accepting.
When Will the Money Be Released?
There are lenders out there who will have the funds in your business operating account in as little as one business day. When you want to get to work on your project right away, that’s a major plus.
Talk with a lender today and learn more about your options for business financing. Even if your credit is not the best, you will find lenders who are willing to work with you and have the opportunity to grow your business.