According to one study, only 48% of businesses have access to sufficient funding.
If you are in that other 52%, you may be looking at business loan providers to try and borrow some money.
But with so many different types of loans and lenders, it can be difficult choosing a business loan. Thankfully we have all the info you need, so keep reading!
- Check Reviews
First, you should check to see what previous customers have said about a particular lender. Don’t worry about a few bad reviews here and there, because there’s always bound to be a few disgruntled customers.
However, if they’re all negative, you should think about finding someone else. You should make sure that they’re a lender who will always return your calls and are easy to reach.
Make sure they’ll address any problems that come up rather than giving attention to someone else who has a larger loan.
- Consider the Flexibility
You should also consider what the flexibility is on some of the lender’s payments. You should prepare for any unseen disaster that could happen with your business.
Ask them upfront what happens if you’re unable to make a scheduled payment for some reason. You should know this before you sign on with them rather than afterward.
- Ask About Fees
You should also ask what fees are attached to the loan. For example, are there any origination, underwriting, or closing cost fees?
They may also hit you with incidental charges which makes your monthly payment more than you originally thought it would be. When in doubt, you can always ask for a breakdown of the charges or a fee schedule.
- Find Out What the Loan Borrowing Requirements Are
When you’re getting a business or installment loans, you’ll need more than just a good credit score.
Lenders will do a financial and criminal background check on you depending on how much money you’re trying to take out. They may also ask to see what your debt-to-equity ratio is and if there are any fixed monthly expenses.
Some banks will also require you to have certain insurance policies in case something goes wrong so that they are protected.
- What is the Collateral?
What happens if you default on the loan? You should ask this question before you sign any papers.
In some cases, if you default on the loan, the bank can then have the right to sell your collateral to pay it off. This is a worst-case scenario, but it’s good to know what will happen if it does come to that.
Learn More About Choosing a Business Loan
These are only a few factors to consider when it comes to choosing a business loan, but there are many more tips out there!
We know that running a business can be overwhelming and stressful, but thankfully you don’t have to do it on your own. We’re here to help!
If you enjoyed this article, make sure that you explore our website to find more articles just like this one.