Questions to Ask Prior to a Business Loan Application

by | Jul 15, 2022 | Business Finance | 0 comments

If you need additional working capital for any reason, odds are you’re going to have to go through the business loan application process. For some small business owners, this may seem like a daunting prospect. However, business loan applications aren’t as complex as many make them out to be. It really is a matter of asking the right questions prior to applying for your business loan. And when we talk about asking questions, we mean asking questions of yourself. You need to take a good long look at why you are applying for a business loan in the first place. And consequently, asking yourself some very key questions will help you paint a more comprehensive picture of how any such loan will in fact benefit your business. Below, we take a look at a few of the questions that you should be asking yourself prior to your business loan application.

Why do I need the funds?

Let’s start with perhaps the most basic question you can ask prior to a business loan application. What do you need the money for? Is there something specific that you have in mind for the loan proceeds, or are you looking to create more of a safety net with the funds? Not only will identifying why you need money help to clarify your loan for you, but it will also help to determine what type of business loan you need. Be it a short-term loan, a line of credit, or a merchant cash advance, each loan is quite different and each loan comes with its own terms. So ask yourself, what do you need the loan for.

When do I need the funds to be available?

First understanding why you need the money is one thing. Another important aspect of any business loan application is understanding when you need the funds. Let’s say, for example, some sort of crisis has arisen. You don’t necessarily have the money to cover the costs associated with this issue. Needless to say, you require the loan funds ASAP. Whereas, if you’re looking at more of a long-term expansion plan, then perhaps you don’t need the money quite that quickly. The speed at which you need the loan to be funded will also help you to determine which type of lender you should be talking to. A conventional bank is going to take much longer to process your application than an online or alternative lender will. This is certainly something to keep in mind.

Is my credit report ready to go?

While there are lenders that look beyond just a credit report or a credit score, you do want to make sure that your credit is in relatively good shape prior to applying for a business loan. Yes, a business loan application consists of more than just one factor. But credit can be a pretty big factor. Check the credit report prior to applying. Look for any errors or inaccuracies. Correct those immediately. Also, try and pinpoint that debt you can start paying down now. The less liability you have, the better your chances of getting approved for a new business loan.

What type of lender do I really want to work with?

This is an important one. There are a variety of lenders out there that issue small business loans. There are conventional banks, credit unions, as well as alternative and online lenders. Each works a little differently, so you need to figure out who you feel comfortable partnering with. Conventional banks do tend to be a bit warier about lending to small businesses. They prefer to work with larger corporations or longer-term clients. It can be difficult to get a business loan through a credit union unless you have been a member for quite some time. With alternative lenders, however, the landscape looks a bit different. They specialize in small business loans. They make the process far less daunting than it otherwise might be. An alternative lender will often take a big-picture approach to your business loan application. This means that they won’t hold you to just your credit score. They want to see what value you bring to the table and how loan proceeds could help your business evolve.

First Union Lending is Here to Help You

We work with numerous companies throughout the US. Our job is to help small businesses thrive and ultimately grow. This is why we do what we do. We offer short-term loans, SBA loans, and equipment financing, among other types of funding. Even if your credit score is not exactly where it should be, we might still have a solution for you. Call today and let’s get started together.