An entrepreneur with deep industry knowledge can still turn a business into a disaster without a financial plan to serve as a buffer when business problems strike. One of the best ways to deal with major setbacks is to apply for the right business loans.
It is not easy to get the right financing nowadays. Some financing firms have strict documentary and credit requirements. Others may frown at applications with poor credit history and inadequate financials. It is advisable to exercise caution when dealing with online lenders ready to “do deals” at higher rates.
Here are three steps to find the most suitable business loans:
1) Scouting: Finding the right creditor is about identifying various loan products and lender. Weigh which of the available options can provide you with the finances you need within a specified period of time.
2) Contacting: At this stage, entrepreneurs talk to loan officers of a certain lending institution to understand the products and financial services. It is also vital to look into customer reviews and check the availability of their customer service when transacting with them. Look for measureable feedback, such as surveys, testimonials as well as the customer service efficiency when scaling the company’s reliability.
Here are questions that a business owner needs to ask a lender:
- What is the interest rate on this business loan? Ask for a loan estimate. Break down the interest rate. Ask the loan officer to include the fees and annual percentage rate. The loan estimate includes the following:
- interest rate
- other charges you will pay for a business loan
- How much is the discount and origination points that will be charged to me? Business loan lenders may charge the borrower for discount points, and origination points. A discount point lowers the interest rate while origination points are fees charged to you by the lender for originating the loan.
- How much is the prepayment penalty on this business loan? Ask about the costs of prepaying the loan. Lenders have different rules and regulations when it comes to refinance or reducing the principal loan.
Find out the prepayment penalty specifics and check if you can get lower rates when you choose a certain business loan option.
- Am I eligible for this loan?
Lenders have different documentary requirements, but most of them are related to your income, business or employment. Financials also include credit history as well as assets, liabilities.
ALC Commercial has less stringent eligibility requirements. We offer business loans even to people with bad credit and those who cannot provide the financial documents most banks ask for.
3) Selecting the right loan: When you think all your questions about the loan products and services are answered you can now choose the plan suited to your needs. Make sure that the amount of business loans, terms of repayment, interest rates and other fees are reasonable enough considering your current financial situation.
For more questions about business loans, contact us today!