Managing your finances is no easy task, and you may have already utilized different finance options out there in your personal life. For example, you might have faced a financial emergency and taken out a payday loan. You might have found the answers you were looking for when you applied for personal finance, but when it comes to business finance, you need to approach it with a different set of questions. Here are the top questions every business should ask their financers before applying.
What Documents Do I Need?
Every lender will have a different set of documents required when applying for business finance. Typically, they’ll request bank statements, ID, and details of the company directors. It’s always best to ask the lender what exactly they’ll need before applying as it can take a few weeks to get everything up together. Especially if they need 6 months’ worth of bank statements or letters to confirm proof of your address, as these things might not be readily available to you.
How Long Is The Process?
You’ll need to ask how long the process in total will be from application to decision, to when you could potentially receive the funding. If you’re needing the funding a lot sooner than they can provide, you’ll either need to wait or possibly look at a different lender. It’s good to know how long the application and decision process will take too. This way you can set aside some time to fill out the form as accurately as you can to ensure your best chance of approval.
What Is The Total Repayable Amount?
Whenever your borrow any financing from any lender, there are always interest rates that apply to the amount you borrow. This means you’ll always end up paying back more than your borrowed amount. It’s best to check the interest rest and the total amount repayable before confirming, as different lenders may offer better rates.
How Long Can I Pay It Back For?
You’ll also want to ask how long you’ll be able to pay it back. You might be planning on borrowing a small amount and paying it off within a few months, but some lenders won’t allow anything less than a year. Or you may be thinking of paying it back over 6 years, but their limit maybe 5. So, to ensure you’re happy with the repayment length, make sure you double-check this.
Is There A Closing Fee?
Some lenders will apply a fee on top of your loan which isn’t immediately payable. Instead, it’s only payable should you completely pay off your loan earlier than the agreed term. This might be called a closing fee, admin fee, or another type of fee, but it will only ever be payable when closing your account. No reputable lender will require you to pay the closing fee upfront before receiving the funding.
What Happens If My Circumstances Change?
As a business, your financial situation may change a lot throughout the year. So, if you’ve borrowed financing for a period of 4 years, you can expect that your cash flow will change. It’s a good idea to check in with your chosen lender and ask if you’ll be supported if things aren’t going to plan. Some lenders may be more flexible with the repayments and reassess them after a certain period of time. You want to make sure that your lender will provide support the whole time you have an account with them so you can feel secure in your choice.
Make sure when you look to borrow business finance that you ask all the questions you need answered upfront and don’t wait until you’ve signed a contract. Otherwise, you may find yourself in a sticky situation and trapped in a loan agreement you might not have chosen if you’d known the answers beforehand. Be sure to do your research on the lenders available and you’ll be able to securely finance your business, helping it go from strength to strength.
