6 Questions to Ask Your Loan Broker

Your professional loan broker can offer you advice based on experience. Their informed opinions and valuable market knowledge can be essential when preparing your business loan application. Whether you are looking for a U.S. Small Business Administration guaranteed loan or a commercial loan you deserve an advisor who provides one-on-one business counseling and guidance. When you meet with an experienced loan broker, he or she will ask plenty of questions: How big of a business loan? What’s your credit score? Is your business profitable? etc.. However, you need to ask the loan broker some important questions too!

6 Questions To Ask Your Loan Broker:

1. Can I get financing for my business startup/expansion idea?

A loan broker can help you with research and loan structuring to help your business ideas thrive. They have databases and professional insights to help you in obtaining the best type of financing for your venture. Additionally, they can help you determine if there is a lender that is a good match for you.

2. How much capital should I borrow?

Business owners wrestling with questions of how to determine the right loan amount to request are wondering: How much can they qualify for? How much money will accomplish their goals? And how much is too much? Some business owners underestimate the amount of money they need to borrow because of cost concerns. Others are exuberant and believe they can borrow more than what most lenders would be willing to extend in credit. Loan brokers can help business owners realistically estimate how much capital they need.  Additionally, they can help lenders understand the loan amount you are requesting by justifying it with a professional loan proposal.

3. Am I prepared to approach a lender?

A business plan alone isn’t enough when you approach a lender to ask for a loan. You will need to put together a loan package, and a professional loan broker can help you do that. Loan package presentations can include everything from the initial presentation requesting the loan from a lender to the professional packaging that is sent to the Small Business Administration.

A basic loan package should include:

– A business plan, with all of the appropriate business financials and projections.

– Personal financial information, including tax returns and credit reporting.

– Legal documents (i.e. articles of incorporation, partnership agreement, licenses, leases, franchise agreements)

– A budget describing the spending of loan proceeds.

4. What type of loan is best for my business?

A loan broker can help you obtain the right type of loan based on your business needs. Determining the correct loan structure, whether you need a term loan for long-term borrowing or a revolving line of credit for short-term borrowing, or whether or not you need a commercial loan or an SBA loan, can be a difficult task. Structuring the correct type of loan and using the correct lending vehicle for your needs is critical, and can mean the difference between success or failure.

5. What financing options are available to my business?

When it comes to business funding options, a loan broker knows the marketplace; they’re familiar with all of the federal, state and municipal loan programs, and have relationships with local lenders and community bankers. Lenders are more likely to consider lending to businesses that have worked with a professional loan broker. They provide credibility to the professional loan request package. A professional loan broker isn’t going to send a client to a lender if they don’t think they’re ready.

Although online lenders such as Lending Club and OnDeck have become more common in recent years, lending advisors know that these are “loan farms” playing a numbers game to reach success, the borrower doesn’t receive valuable one-on-one guidance and therefore it is not recommended for business owners to seek out these financing sources.

“I don’t refer clients to programs that I’ve not physically spoken to a loan officer about,” Benjamin F. Johnson V, Principal of North Texas Loan Advisors, LLC.

6. Are the loan terms a lender has offered to me good?

Before you execute a loan agreement, a professional loan broker will help you read the fine print and understand the terms and conditions. When a lender is showing interest in your loan, they will typically issue a conditional commitment letter offering you terms. A professional loan advisor will be available to guide you through the offer and help you make a determination on whether or not it works for your business.

Whether you are seeking financing for your next equipment purchase, moving your business to a new location, looking to grow your revenues to the next level, or just starting up, North Texas Loan Advisors, LLC has the professional experience and expertise to help you obtain success.

Contact Us Today!