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9 Questions You Should Ask Before Getting Small Business Loans

Getting Small Business Loans

As an owner, do you need access to small business loans to give your business the boost it needs for success? Financing is a necessary aspect for every business, and small business owners usually approach either banks or small business lenders.

However, obtaining a small business loan from banks is not easy, as they typically don’t approve small loans due to the high cost of underwriting them. As a result, small business owners often turn to the internet for alternative funding sources.

Thankfully, gone are the days when banks were the only option for small business loans. Today, many small business owners opt to borrow capital to overcome hurdles and keep their businesses afloat. A well-suited loan can turn around a struggling business, but making the wrong choice can result in the sinking of the entire enterprise.

Therefore, it’s essential to choose the right lender that can make a significant difference in leveraging the loan to create value in your business, rather than risking its viability.

At BitX Funding, we assist small business owners in answering important loan-related questions that arise during the loan application process. We help them get on the right track to success by providing them with the necessary information before they apply for financing.

Before applying for a small business loan, there are nine essential questions you should ask your lender. By doing so, you can make informed decisions and increase your chances of success.

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1-What type of small business loans are best for my business?

Before you apply for a small business loan, it’s significant to understand the different types of loans available and which one is best suited for your business needs. Some common types of small business loans include SBA loans, term loans, lines of credit, invoice financing, and equipment financing. Each type of loan has its own requirements, repayment terms, and interest rates, so it’s important to do your research and find the one that’s right for your business.

2-What are the interest rates and the total cost?

In order to assess and compare finance options, there are several prices and comparison tools. The annual percentage rate (APR) is one way of comparing loans. It is particularly true when comparing loans of various durations. This is true.

When comparing loans, ensure you compare the full APR, as all fees are included in this calculation. In addition to interest rates and fees, it’s essential to know the total interest cost and loan amount.

For instance, your total dollar cost would be $1,500 if you borrowed $100,000, and your full payback would be $11 500. The dollar cost can easily help a company determine its accessibility and comparison costs with expected ROI.

This is one reason you wish to ask yourself this question before you meet a loan officer at the Bank or an online lender. Your loans forced you to get informed about that decision.

3-What will my payment schedule be with small business loans?

The advent of periodic payments every day, weekly, and monthly is an exception to the more traditional monthly method of payment. Nonetheless, for a number of reasons, a more frequent than monthly payment schedule was adopted by many lenders. Not least is that, instead of the traditional lumpy cash flow drain associated with a single payment every month, it tends to reduce the cash flow burden during the month.

It is important to ensure that your business has the potential to give a consistent cash flow to your lender throughout the month if your lender requires a daily or weekly payment schedule. Such a schedule of payments might not be an appropriate choice for companies that rely on month-end cash flow.

4-When is my first payment due?

It makes sense to assume that your first payment is due at the appropriate time of the month after you take the loan. On the other hand, your first payment will likely be due on the following day after the acceptance of the loan process only if you have a daily repayment schedule.

This could be an issue for the business owners who do not expect the first payment to be due but would be welcome if they know what they are looking for better than asking. These are the unexpected demands which can cause dismay.

5-How do I make my periodic payments? 

While certain creditors still accept the paper check that the borrower sends to the lender, many lenders (even online creditors), by means of an ACH withdrawal from a business’s bank account, are now automatically charged. This is a common practice that is very convenient for many business owners. This is an easy way for the creditor to quickly collect payment for the loan – a clear advantage for them. However, it could be good for the borrower for several reasons.

Make sure you know precisely what is debited with each periodic payment from your account. Is it fixed, or does it depend on what is on your account? It’s fixed. You will want to confirm whether you have a daily debit or not; your account will be debited daily or every day so that you can prepare for it and make sure your business account has adequate funds to meet your debts.

You will also want to make sure you understand the process if there are difficulties and if the periodic payment is due, there is not enough money in your account. A good lender should be ready to work with someone with an isolated problem proactively. You want the loan process to be as successful as you are.

6-How long will the loan application process take?

It might take from one or two days to a few weeks, or even months, depending on the lender. It may be that some of the lenders you are out of early because your typical approval process takes too long, depending on how quickly you want your loan and the capital.

Thankfully, some lenders offer speedy decisions, allowing funds to be deposited into your account within 24 hours of approval.

7-What is your Better Business Bureau (BBB) rating?

That’s not the only way to learn how a company does business, but also how it solves problems. In addition to the BBB, don’t be shy about visiting a review site or two to learn.

About the lender as much as possible.

8-May I speak to a few of your current and past customers?

Meeting with one or more customers, reviewing their success stories, gathering customer testimonials, and checking online feedback can be a valuable approach. Speak with a few thriving clients to determine if their experiences were positive.

If anything seems out of place, don’t hesitate to ask for clarification. Additionally, don’t be afraid to seek out other options if the lender is unable to address your concerns.

9-Do you report my credit history to the business credit bureaus?

Your good credit behavior does not help you to construct an even stronger business lending profile if they don’t report. Some lenders don’t like commercial cash advance providers. Do not, therefore, assume that you interview the lender. This should be an important consideration when looking for a small business loan.

You will likely meet one or two different lenders in the borrowing process. One is the “sell me your stuff” guy, and the other is the professional financing company that seeks to help you find the best funding for you that meets your financial needs.

Why BitX Funding For Small Business Loans:

BitX Funding is a reliable funding source that connects small business owners with the right lender and loans. We comprehend the difficulties that small business proprietors confront in acquiring financing, particularly when they do not meet the stringent eligibility criteria established by conventional banks. Therefore, we provide alternative funding solutions such as merchant cash advances, invoice factoring, short-term loans, and business lines of credit. These options enable small business owners to obtain the necessary funds quickly and effortlessly.

Our reputation as a trusted funding source is based on the high standards we set for ourselves. We are proud to be rated highly on Trust Pilot and the Better Business Bureau (BBB) for our commitment to ethics and transparency. Additionally, our application process is designed to be similarly easy to that of a credit card. It takes as little as 24 hours to receive a loan amount, making it easier for small business owners to manage their cash flow.

If you’re a small business owner seeking funding, we suggest exploring the Small Business Administration’s 7(a) loan program. This option offers a long-term loan with interest only charged on the portion of the loan used. Alternatively, you could consider selling your invoices to a factoring company. This would give you instant access to the funds you need and improve your cash flow. Apply Now or call 203-275-5433 to discuss your funding requirements.


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