Ask the right questions

Before you walk into a bank or apply online, it’s important that you’re prepared to have the important conversations that will help you secure financing for your small business. Here are a few questions you might want to consider ahead of your big chat.

QUESTIONS TO ASK YOUR LENDER

  1. Have you ever approved a loan for my type of business?
  2. What is your average loan amount for a business my size?
  3. Who approves or denies the loan application?
  4. How long does the application process take?
  5. Do you require a personal guarantee?
  6. How quickly can you provide the approved funds?
  7. How much can I borrow based on the asset I’m using for collateral?
  8. Does the loan have a prepayment penalty?
  9. What additional fees will I need to pay?
  10. When does the loan need to be paid in full?

QUESTIONS YOUR LENDER MAY ASK

  1. How much money do you need?
  2. What does your credit profile look like?
  3. How will you use the money?
  4. How will you repay the loan?
  5. Is your business’ cash flow greater than the debt you will take on?
  6. Does your business have the ability to make the payments required under the loan?
  7. Can you put up any collateral?
  8. Is your collateral sufficient to pay the loan in the event you need a backup source of loan repayment?
  9. Does your business have a profitable operating history?
  10. Does your business control its own inventory and expenses?
  11. Are your sales growing?
  12. Are your profits increasing as a percentage of your sales?
  13. What is the future of your industry?
  14. Who is your competition, and what are their strengths and weaknesses?
  15. Does your business collect and pay bills?
  16. Are all business officers committed to the business?
  17. Does your business match sources and uses of funds?
  18. Do you have discretionary cash flow?