5 SBA Loan Questions to Ask Before Getting a Loan
If you’re an entrepreneur, it can be difficult to find a small business broker who’s truly looking out for you.
More often, we’re seeing unscrupulous players who are only concerned with stuffing their pockets. The business owner is then left with crippling debt, and the inability to pay it off.
That’s why loan offices still remain a popular choice. But, if you go this route, you still need to ensure that you’re signing for a rate and terms you agree with.
Read on for 5 SBA loan questions you should ask your loan officer before applying.
1. What additional costs will be added to my loan?
Prior to even thinking about that SBA Form 770, you want to know what everything’s going to cost you.
Luckily, of all lenders, banks and other local financial institutions tend to offer the lowest rates. The average APR from a local bank is 3%.
Also, if you’re working with a broker from a community bank, they may tack on fees too. Decent brokers will only charge between 1% and 2% of the loan value for their services.
However, that’s not always the case, so you’ll want to cover your base early on.
2. Do you offer short-term or long-term loans?
By now, you’ve probably identified what the purpose of your loan is. With this information, you should determine if a long-term or short-term loan is in your best interest.
Depending on your financial situation, one option will likely be a better fit. You should resolve this early on because not all institutions offer both options.
3. How long does it take for this process to be completed?
Depending on your lender, the loan application process can actually take some time. Often, it takes several days or even a few weeks before a financial institution can approve your loan.
If you are in need of a quick turn around, this can help you eliminate lenders with long processing times.
Luckily, most lenders have fairly quick processing times and can let you know sooner than later. Some even can give you their decision within 24 hours.
4. When am I expected to make payments?
Coordinating a payment schedule is an imperative task with your lender. Both parties need to be on the same page to avoid any confusion or ill feelings down the road.
Traditionally, lenders received their payments in monthly intervals. Now, many allow you to make payments every week or every other week.
Some even allow you to make smaller daily payments.
If your lender requires daily or weekly payments, be sure that you have steady money coming in.
5. Does my industry matter?
Some institutions will only lend or refuse to lend to businesses within certain industries. Whether it’s too contentious or risky, certain businesses are frequently unable to receive backing.
This should be one of the first questions you bring up with a broker. This will save you from wasting time with someone who is unable to help.
If this is a concern of yours, you should probably consider going with a private investor. You can find private brokers who specialize in certain industries.
More SBA Loan Questions?
If you still have some SBA loan questions, then drop us a comment below!
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