9 questions you should ask your loan broker now!
Now that you’ve decided ato go with a loan broker to fund your business plans, the time’s come to choose between a few that you may have shortlisted.
You might be wondering how to approach them, or what questions to ask. Asking the right questions will make your needs clear so that the broker can best guide you. You also need to make sure you’re dealing with the right team who has your best interests in mind.
So what are the top 9 questions to ask your loan broker when you’re looking to get a competitive business loan?
1. How experienced are you as a business loan broker?
Check if the broker has experience lending to businesses in the same industry as yours. Also check if the broker has experience in dealing with different types of businesses. And whether they have the right software to gives them a complete market view.
Scrutinize the background, history and success rate of your loan broker. Ask for a few references. Contact those references to know how the experience was working with them and if they are satisfied.
Check if the broker is registered and licensed with MFAA (Mortgage & Finance Association of Australia). You can check if they’re registered through the ASIC (Australian Securities and Investments Commission) portal.
2. How many banks or lenders will you approach?
Your loan broker should have a trusted partnerships with banks and other potential lenders to get your application seen by the most suitable lenders. They could even get lenders to compete for your business so that you get the best possible interest rates.
3. Will you advise on the best type of loan to take?
A lot of brokers are simply out to make money. You need someone who advises the best option for your business, and not someone who is hungry for commissions by making you opt for an expensive option.
The loan advisor or team should be aware of all kinds of loan options available including secured and unsecured loans. They must provide multiple offers and also educate you on details including the interest rate structure such as fixed-rate, variable rate, and interest only loans.
Sometimes consolidating your loans - credit cards, loans and mortgage - can be beneficial and save you money. Ideally your broker should advise you on the pros and cons if that what’s suits your business best.
4. How much do you charge for your services?
Most brokers charge a percentage of the rates they can get you from a money lender. Be sure to ask how much percentage extra or commission they would charge for their services. And some brokers don’t charge their clients, but only the money lenders.
Get all this in writing so that there is no ambiguity at the end of the transaction.
5. Can you help if I don’t have a good credit history?
Many business loan lenders may refuse you if you have a poor credit history.
Your loan broker should advise you on possible alternatives such as getting a microloan from a credit union, or get a business cash advance. Or correct your credit history by getting a business credit card and making purchases and on-time payments.
6. What procedure do I go through to get a loan?
Understand the different steps that you’ll have to go through to get credit and even to provide a property as collateral. Enquire about the sequence of events, and any legal and administrative steps to be taken at each stage.
This will help you be prepared with funds, information and documents at each stage.
7. What fees will I incur?
You may already know the deposit amount, loan principal, interest rates, commissions, loan processing fees and application fees associated with a proposed loan. Ask about all other service fees that business loans come with, including underwriting fees, valuation fees, exit fees, early termination fees, lender account maintenance costs, switching fees, and so on.
8. What documents must I have?
Get the entire list of documents required in all scenarios, so that you can be prepared in advance. You should face no delay due to missing paperwork at any stage.
9. What will you do with my information?
You will be divulging a lot of public and confidential information about your business during your loan application. Get in writing that your data will not be misused, and will stay secure and private. Make sure they have the needed software security protocols in place.
Beware of those brokers who could sell your data to outsiders. You definitely don’t want some equipment dealer, financial planner or insurance agency to meddle with your data!
Sort out answers to all these queries in the first place. You should be rest assured that you are in safe, capable hands that will secure your funds in a hassle-free manner.
Tagged in: Business Loan Broker, Financial Loan Broker, Business Tips, Small Business Owners, Small Business Loans
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