These Are Some Very Important Questions to Ask Before Signing That Business Loan

Pennygem

Business loans are great to help build your business or to step in during hard times. But before you sign on the dotted line, PennyGem’s Lenneia Batiste has 5 main questions you should ask, first!

Transcript

00:00So you need a business loan whether to help you build your business or hold you over if

00:07you're having a rough patch.

00:09Business loans are great to help you achieve and maintain your business goals.

00:12But if you aren't careful, they could become a pain later.

00:15So here are some questions to ask first before you sign on the dotted line.

00:19First is a loan actually the best choice.

00:21Forbes says if you look around, you might be able to get direct funding from an angel

00:25investor or your business may qualifying for a grant.

00:28Do a little research with your direct community.

00:31Next, what is the total cost of the loan?

00:33OnDeck says many business owners only focus on the APR, but you should also ask about

00:38the total cost of financing so you can see exactly how much you're paying back.

00:42For example, for a $10,000 loan, you might actually pay back $12,000 or $13,000 back

00:49to your lender once interest is added.

00:51This next step is important.

00:53Determine if the lender will do a hard or soft pull on your personal credit.

00:57Finance experts say that some lenders can do a soft pull to determine creditworthiness

01:01so you can determine if the loan is right for you without marking up your credit.

01:06And of course, read all the fine print and look for penalties for early repayment,

01:11grace periods, and when an interest rate will change if it's not a fixed loan.

01:16Always make sure you're making the best decision for your business.

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