Looking for a business loan, do not accept the first offer that comes your way… not every small business loan is right for you.
There are plenty of different factors to take into account, but you can start by asking yourself these 5 questions to figure out what your business requires from a lender.
1. How much money does your business need?
You’re looking for a business loan because you need money that you don’t have right now–so you should have an idea of how much cash you’re looking for. For a lender this is the most important information, so it’s important to be flexible and realistic with the range you ask for. Be responsible with what amounts you ask to borrow, and think carefully about how you could spend what you’re offered.
2. How much is it going to cost?
When comparing loan options, most people look at interest rates to determine which loan costs more. You should ask the lender for the loan’s annual percentage rate, or APR, as well. This figure takes additional fees, like origination and loan processing charges, into account, giving you a more accurate estimate of the loan’s total cost. The more you know about the costs of your options, the better you can figure out whether your business can afford the loans you’re considering.
3. What’s the term of the business loan?
You can pay some loans back over the course of 6 months–while others could take 10 years. Different term lengths also generally come with different repayment schedules. The shorter your loan term, the more often you’ll make smaller payments, and the opposite for longer terms.
4. How soon do you need to be funded?
When it comes to business financing, generally speaking, fast cash is expensive cash.
If you need that cash now, then you need it now–but remember that you might be able to save money if you’re willing and able to be more patient with the loan application process.
5. Why do you need a business loan?
First of all, do you need a term loan or revolving credit? If you’re looking for help with making recurring expenses, or you want a cash cushion in case of a rainy day emergency, then a line of credit or business credit card could be just what you need.
There are plenty of different options, so explore what’s out there in order to find the best financing option for your small business.
Need help determining what kind of loan is best for your business? contact First Down Funding today
This post was written by fdfadmin