3 questions to ask yourself when applying for a small business loan
Learning how to get a small business loan or merchant cash advance can provide you with peace of mind, and the funding your small business needs to grow. Although your business may need alternative financing as soon as possible, don’t rush into an agreement that you may regret. Prior to completing your small business loan application, educate yourself on the lender’s credibility, payback rates and products. As much as your business may need funding, you won’t want to take out a loan that could end up hurting your business. Learn how to get a small business loan with these three tips:
1. Is the loan more money than I need? Prior to applying for a small business loan, determine how much money your small business requires. Refining your business plan and deciding how you’d utilize a loan will also be very helpful. After applying for a small business loan, if your application is approved, the lender will tell you the amount you’ve been approved for. If you feel that it is too much money, speak up. A responsible lender will ensure that your small business can handle the loan and that it fits your needs.
2. Can I handle this repayment schedule? In addition to the funding amount, you’ll also need to make sure that your business can pay back the loan in the amount of time the lender approves you for. If your business can’t handle the payment schedule, let the lender know upfront so that you can potentially work together to come up with a different solution.
3. Will my business be stacking loans? If you’ve taken out a small business loan before and are still in the process of paying it back, you are at risk of “loan stacking.” Stacking is when you have an existing loan, and receive another loan from a different lender while in the process of repaying your original loan. This could cause issues for your small business and both lenders, so be wary of taking out an additional loan until your first loan is paid off.
Alternative financing is great – but only if you’re working with a quality small business lender that will provide you with a funding amount that is personalized to your business. If you take these questions into consideration while learning how to apply for a small business loan, you’ll be more likely to find a loan that fits your small business’s requirements. Good luck!
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.