5 Main Questions To Ask Before Signing A Business Loan?
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!
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00:00 (upbeat music)
00:03 So you need a business loan,
00:05 whether to help you build your business
00:06 or hold you over if you're having a rough patch,
00:08 business loans are great to help you achieve
00:10 and maintain your business goals.
00:12 But if you aren't careful, they can become a pain later.
00:15 So here are some questions to ask first
00:17 before you sign on the dotted line.
00:18 First, is a loan actually the best choice?
00:21 Forbes says if you look around,
00:22 you might be able to get direct funding
00:24 from an angel investor
00:26 or your business may qualify for a grant.
00:28 So do a little research with your direct community.
00:31 Next, what is the total cost of the loan?
00:33 OnDeck says many business owners only focus on the APR,
00:37 but you should also ask about the total cost of financing
00:40 so you can see exactly how much you're paying back.
00:43 For example, for a $10,000 loan,
00:45 you might actually pay back 12 or $13,000
00:49 back to your lender once interest is added.
00:51 This next step is important.
00:53 Determine if the lender will do a hard or soft pull
00:56 on your personal credit.
00:57 Finance experts say that some lenders can do a soft pull
01:00 to determine credit worthiness
01:01 so you can determine if the loan is right for you
01:04 without marking up your credit.
01:06 And of course, read all the fine print
01:09 and look for penalties for early repayment,
01:11 grace periods, and when an interest rate will change
01:14 if it's not a fixed loan.
01:16 Always to make sure you're making the best decision
01:18 for your business.
01:20 (upbeat music)