1.What are the Total Costs of the Loan?
Ask about the interest rate, fees, closing costs, and any other charges. Understanding the Annual Percentage Rate (APR) will help you know the total cost of the loan over its lifetime.
2.What is the Repayment Schedule and Term?
Clarify the repayment period, frequency of payments (monthly, quarterly, etc.), and whether the terms are flexible. Ensure the repayment schedule aligns with your business’s cash flow to avoid financial strain.
3.Are There Any Penalties or Fees for Early Repayment?
Find out if there are any penalties for paying off the loan early or for making extra payments. Some lenders charge prepayment penalties that could impact your overall loan cost.
4.What Type of Collateral or Personal Guarantee is Required?
Determine if the loan requires collateral (assets like property or equipment) or a personal guarantee (your personal assets). This helps assess the risk and understand what you could lose if the business defaults.
5.What Are the Lender’s Eligibility Requirements?
Understand the lender’s requirements, such as credit score, business revenue, and financial documentation. Knowing this upfront helps you prepare properly and gauge your chances of approval.