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14 Jan 5 Questions to Ask Lenders Before Applying for Small Business Loans
While some small business owners are experts in producing results and building revenue, they may need assistance in other areas. You can apply for a small business loan for a variety of reasons. Perhaps you want to increase your inventory or renovate your facilities. Or maybe you need extra cash flow to launch a marketing campaign or help cover payroll.
If you think your business could benefit from a loan, contact a lender to learn more about the application process. Here are five questions to ask lenders before applying for small business loans:
1. How Long Will the Loan Process Take?
The loan application, approval, and funding process differ between lenders. Some lenders may have more stringent requirements for their applications, which can slow thing down. According to Chron, the Small Business Administration (SBA) loan process can take anywhere from 60 to 90 days. Fortunately, there are lenders who work at a quicker pace. Alternative lenders expedite the application process, usually delivering funds within 24 hours. No matter what industry you’re in, working capital is critical for your business. At QuickBridge, all we need to get things started are your three most recent bank statements.
2. What Do I Need to Qualify?
One of the first questions to ask lenders is what you need to qualify for the loan. When you apply for a small business loan, you’ll need to submit some information. This data may relate to your business’s revenue, risk level, or financial history. Some documents that lenders may require when you apply for financing include:
• Driver’s license
• Bank statement
• Personal and business tax returns
• Income statement
• Balance sheet
With an average loan approval rate of 56%, it can be a challenge securing financing from a traditional bank. Alternative lenders, like QuickBridge, provide working capital without stringent requirements. Many individuals who get declined for a small business loan at a traditional bank, qualify for an online loan.
3. How Much Do I Qualify For?
One of the most important questions to ask lenders is how much funding you qualify for. You should make sure you can gain enough working capital for your specific business needs.
The answer to the question of how much you qualify for may vary depending who you ask. There is no universal minimum or maximum amount you can borrow from all lenders. Generally, lenders determine how much money they’ll lend you based on your personal creditworthiness, your business’s financial stability, and the terms and type of loan.
The variations associated with these factors can make the lending process confusing. You will need to work directly with your lender to find out how much funding you qualify for based on the documentation you provide. As a potential borrower, consider how much money you need and what you can afford to pay back.
4. What Can I Use the Funds For?
When applying for a small business loan, you may have already planned where you’d like to spend your funding.
Some lenders set restrictions on how you can use your funding and might require you to borrow more than you need. At QuickBridge, our precision short-term loans can be used for almost any business purpose. Some ways you might use your small business loan include:
• Business expansion
• Inventory financing
• Marketing and advertising
• Business operations
• Renovation financing
• Business tax debt
• Employee payroll
• Equipment financing
The way you spend your funding may also depend on your business’s specific industry. Make sure you work with a lender who is familiar with your industry’s unique business needs.
5. Is There a Penalty for Paying off the Loan Early?
It’s important to know whether you will be penalized for paying back the loan early. Some lenders will hold you to the full term of your loan or charge a penalty for clearing your debt early. You should be cautious of lenders who penalize early payoffs. At QuickBridge, we believe that paying off a loan early should be rewarded, and we’ll provide incentives to our customers for doing so.
Applying for a business loan may seem overwhelming. Reviewing these questions to ask lenders can help you better prepare for the loan process and determine whether a particular lender is the right fit for your business.
At QuickBridge, we put your business first. Our loans are structured to match your unique business needs and opportunities. We’ll make sure you get the right amount at the right term, so you can achieve your immediate goal and move on to the next one. Our application process is simple, and funds are delivered within 24 hours. Contact us today