You have many options to get working capital for your small business to ensure you have enough cash flow. Here are common questions to ask to help you find a small business lender that best meets the needs of your company.
- Are you a broker or a direct lender?
- What does it take to qualify for funding from you?
- What’s your loan process and procedures?
- Do your clients have a credit line amount? If so, how do you determine what it is?
- If my business grows quickly, how will your financing keep up with my business?
- What restrictions and costs do you have if I end a financing agreement with you? If I decide to leave the relationship after three months, would it cost me?
- May I get references to contact about the quality of service your firm provides?
- Do you require personal guarantee from company owners?
- With whom will I deal with on a day-to-day basis?
- Do you have a credit committee?
- What happens if a default occurs?
- Can the loan be transferred or sold?
- Will you have access to my bank/checking/PayPal/etc. account? If so, will you ask for my login ID and password?
- What is the total interest I will be paying for the duration?
- Is there a penalty for paying back the loan early?
Fees to ask about
- How do you determine your fees?
- Are your fees a flat fee or proportional to time?
- Do you have the following fees? If so, what is it?
- Application fees.
- Line fees.
- Maintenance fees.
- Origination fees.
- Hold back fees.
- Transaction fees.
- Monthly fees.
- Interest rate.
- Any other fees.
Questions for factors who do invoice financing
- How long does it take to sign up a new client? What are the set-up fees and are they refundable if you’re funding my business?
- How fast do I receive funding from you after I send you the invoices?
- How do you send money? What are the charges for expedited services like wire transfers?
- How do you interact with my customers?
- Must ALL my clients’ invoices need to be funded through you if I work with you?
- Do you bear the risk if my clients files for bankruptcy or do I?
What other questions would you ask?
Image credit: Jim Sneddon