1. Do I need just one large loan, or should I apply for several loans? 

First, ask yourself what you would be using the funds for. If you are looking for just one lump sum, then look into SBA Loans* or other large bank loans that will give you the amount of money needed to fulfill your company requirements. But if you are thinking about having multiple small loans to fund smaller portions of your budget, consider working with a SPA lender who specializes in smaller loans. They will have an easier time making a decision on your loan application and may be able to give you the funding needed faster. 

2. What is my credit score and how much debt do I already have? 

If your scores are not in good shape, it can be harder for lenders to provide you with a loan in this competitive lending environment. Before exploring other financing options, focus on building good credit by paying down existing debt or increasing assets that can improve your score (ex: reduce balances monthly). 

3. Can I afford the monthly payment if the loan requires one? 

When choosing between multiple lending options, make sure to find out what would happen if you were unable to pay off the full amount of the loan when required. You should also find out if you could refinance or change your repayment schedule to make it more affordable. 

4. How long will the financing last? 

Some funding options only last for a few years and then must be paid off, while others can give you up to 30 years of monthly payments. Ask yourself how long your business needs the funds and what would happen if the loan was not available after that time period has passed?

5. What is my business plan and who is my competition? 

When applying for a small business loan*, ask yourself what kind of impact this investment would have on your company’s growth strategy. Your lender should be able to see clearly how their money is helping you succeed in the future! Also check with existing creditors and other businesses in your industry to see what kind of terms they are offering. That way you can evaluate your options and choose the best option for your company. 

6. What is the cost of the funding? 

Before applying for a loan, look into alternative non-traditional funding options that might not require interest payments. Some companies may be able to receive equipment, inventory, or advertising supplies at zero percent financing or pay later with other popular services available online. *SBA Loans are offered by private lenders who have partnered with the US government to provide no-risk loans backed by feds agencies like SBA (Small Business Administration) and USDA (United States Department of Agriculture). These loans offer $5K - $500K funds in as little as 7 days for new business owners who qualify. Click here for your free SBA loan quote.

Do You Know Your Credit Score?

A credit score is one of the many factors lenders use when determining whether you are approved for a loan. Lenders receive an applicant's credit score from an independent credit reporting agency (CRA), which acts as an intermediary between them and borrowers; therefore it may take a few days for your score to be made available. Credit scores are used by lenders to determine how likely you are to pay back a loan on time, and influence their decisions about whether they'll provide you with a loan or at what interest rate. 

There are five major credit bureaus in the United States

Equifax, Experian, Innovis, TransUnion, and Callcredit (in Canada), which all sell consumer credit reports and scores to creditors and other third parties. A six-digit number called a FICO score is used by the three largest credit reporting companies Equifax, Experian, and TransUnion - as a way of measuring your credit risk at one point in time. The FICO score is named after its creator, Fair Isaac Corporation. A FICO score ranges from 300 to 850, and the higher the better. 

Conclusion

Small business funding is available from a wide range of sources. Financing an idea into a thriving small business can be challenging, but there are options available for those with little to no collateral and credit history. No matter which method you use to secure small business funding, it's important that you have a clear understanding of what each lender can offer and how they calculate return on investment. This will help you select the best option so that the ROI potential exceeds the costs associated with borrowing money and interest payments.