Many small businesses will always meet some roadblocks on the road during their first few months after starting. There are the usual problems, including the lack of clients and customers to do business with, or the insufficient advertising. And in rare cases, they might even have financial trouble right away that they need to pay off, or else they might have to close down.
Fortunately, they can turn to commercial finance providers to give them a loan that they can receive right away. If you are new to getting a short-term commercial loan, you might have several questions in your head that need answers before you move forward with the loan. It is always better to get some answers before getting any type of loan to help with decision making.
FAQ #1: How much money can you borrow?
The main question every business owner wants to know is how much money they can get out of the loan. But before anything else, you have to figure out how much your business needs as opposed to how much you can borrow. Your lender will most of the time assess your overall financial situation and assess how much you can repay.
In some instances, you do not have to necessarily get the full amount of the loan all at once. Other lenders can provide a line of credit, and you can use that when you only need it. It is the most effective method that lenders do to control the amount of money the borrower has to take out, which decreases the amount they have to repay.
FAQ #2: Are there prepayment penalties?
You may have second thoughts about going to commercial finance providers because of their prepayment penalties. You should know that some lenders do not have prepayment penalties, which will give small business owners a sigh of relief. The prepayment penalties are set up so that lenders can get the same amount as to how you would pay off the loan regularly.
You should always ask your lenders before getting a loan from them if they have prepayment penalties to avoid paying too much. But if you are left with a lender that imposes penalties, you need to understand all the terms in your loan documents because it outlines all of the different fees related to the loan.
FAQ #3: Do you require collateral when getting a loan?
Every lender will always ask for collateral when you are applying for a loan because it serves as a method to recoup their losses when you fail to pay it off using money. It is commonly done to high-risk borrowers, like those who acquire a significant amount of money. The collateral the lenders would ask from you would usually be in the form of a physical object with a monetary value equal to your loans, like houses, vehicles, or land.
However, some lenders do not require collateral when applying for a short-term commercial loan, but there are only a few of them. But it is better for you to own some sort of collateral when applying because you will never know when you will need the loan at a moment’s notice.
If you want to get the best short-term commercial loan, you need to find the best ones. There are many commercial finance providers that small businesses rely on for getting out of a tight spot.