![\"Best](\"/images/content/5af/4720392a3a453198b456f/300_-185-)
The key to a great borrower-lender relationship is communication and proper funding. Here are 5 questions your lender should ask you.
\nSo you need financing to get your business to the next level? One of two things has probably happened: you either went to a bank and they denied your loan request, or you know you don't want to waste your time because the banks rarely approve small business financing requests. We all know what happens next... hello internet.
\r\nAs your search begins, you'll find all kinds of impressive websites that convince you that your funding is just weeks or days (or even minutes) away. Of course you would be wise not to believe everything you read online but ultimately you'll likely end up speaking to some different people who try to sell you different financing packages and who offer to help you with your funding needs. To say that it could get confusing would be an understatement.
\r\nYou will likely encounter one of two different kinds of people. One is the \"sell you my stuff\" guy and the other is the business financing professional who seeks to help you find the best financing for you that either meets some or all of your financing needs.
\r\nThe \"sell you my stuff\" guy doesn't ask as many questions and likely will spend more time telling you about their awesome funding options. The business financing professional will have a few basic questions. Here are some basic questions that would be asked by someone who seeks to understand you and your needs before offering you a funding solution for your business.
\r\nThis is a pretty obvious question. This one won't get missed too often; just don't let someone talk you into getting more money than you need. The only time that makes sense is when you're setting up lines of credit. Typically you don't get a loan until you need it but it's wise to set up lines of credit before you need them.
\r\nEditor's Note: Looking for business loan? If you're looking for information to help you choose the one that's right for you, use the questionnaire below to have Business.com, provide you with information from a variety of lenders for free:
\r\n\r\nIf you need to finance a big piece of equipment then it's likely that you'll want to get a lease or a loan to finance that equipment. Using a working capital line of credit is rarely a good use of funds for equipment since your lines of credit should normally be for shorter term needs and not for financing long-term debt. When you understand what you need the money for, it allows finance professional to think through lenders who like the kinds of transaction you're entering into. It also helps to know if a loan is best or if a line of credit would be more appropriate.
\r\nIf you need $250,000 to start your business and it's needed for a variety of purposes then it's likely that you can take that financing in tranches or stages. So getting started with $100,000 will probably be fine for a few months or the first year. However, if you need $250,000 for a large piece of equipment then that's a totally different form of financing and you probably can't get anything done with $100,000.
\r\nTell me about your personal credit
\r\nDon't forget this one. If you're in the early stages of getting your business off the ground sometimes this is all you've got. Be sure to treat your credit as an asset and remember that the better your credit is the more funding options you'll have -- and the lower the cost of those options. If you have a business that creates less than $10 million/year in revenues then your personal credit is probably going to matter.
\r\nBut what about those websites that says that your credit doesn't matter for a small business? Good question. There are definitely a large number of non-bank lenders out there who are willing to lend to people with damaged credit. Just remember that the money won't be cheap. There's a time and place for everything, but you're a small business owner so just remember that when your personal credit isn't good you'll pay for it many times over.
\r\nSometimes I ask this question first and sometimes I ask it last. Entrepreneurs are famous for giving you an earful on this one, so I personally sometimes add the \"cliff notes\" part to help my clients get to the point. Naturally, the \"sell you my stuff\" guy is less interested in your business and more interested in \"closing a deal.\"
\r\nThe reason this question is so important is both to get the proper funding but also for communication with the lender. Finance professionals often work with a variety of lenders and act as a liaison between borrower and lender. It is important that they understand the borrower, their business and their needs so they can properly answer the questions from the lender.
\r\nSo as you're seeking the funding you need, be sure to pay attention to the guys and gals on the other end of the phone or email conversation. Are they asking questions to understand and assist, or did you get one of those \"sell you my stuff\" guys? It's confusing enough trying to get financing so plan on making the effort to find someone who will help you navigate the confusing terrain that's out there, and who has your best interest in mind and at heart.
\r\nRelated Articles For Business Loans: How to Choose the Best Business Loan
\r\nBest Business Loan Comparison Guide - Business.com
\r\nLooking for the best small business loan service? We have expert reviews and feature comparisons of the top business loan providers.
\r\n\r\n
What Government Loans are Available to Entrepreneurs? - Business.com
\r\nSeveral loan programs are available to startups and growing businesses, as we found when we went looking for an answer to Business.com user Jenny Simon's question.
\r\n\r\n
How to Start a Business Without a Loan? - Business.com
Debt isn't the only way! Here are alternatives to getting a loan in order to start your business.
\r\n\r\n
\r\n
\r\n
\n","docType":"article","guid":"articles_7f14155843451c13b9151cf20ff32fb8","lastModified":"2015-02-18T18:00:00.000Z","published":"2015-02-18T18:00:00.000Z","structuredData":null,"subtitle":null,"template":"v1","title":"Before the Business Loan: Questions That Must Be Asked","type":"article","author":{"avatar":null,"bio":"Tom Gazaway is the founder and President of LenCred. His expertise is in helping small business owners who are in the first 2 years of business to properly obtain business financing that separates their personal and business credit while also protecting, preserving, and improving their credit profiles. Since very few startups are able to obtain bank financing this gives them a much better chance of being “bankable” after they have been in business for 2 or 3 years.\r\n\r\nTom holds FICO® Pro and XCO certifications from AllRegs Academy and Xinnix Mortgage Academy. He has also been trained by the nation's premier credit expert, John Ulzheimer, and was certified by John as a Certified Credit Expert Witness. He has extensive training & experience in integrating loans and lines of credit into various business financing, debt management, cash-flow, and credit preservation strategies.\r\n\r\nTom has written and shared his knowledge, experience, and insights for Business.com, SCORE, Dun & Bradstreet Credibility Corp., SmallBisTrends.com, and Lendio. Additionally he has written many blogs over the years on the LenCred blog, The Business Finance Lounge.\r\n\r\nLenCred has been named to many fast growth lists, both national and regional, such as Inc 500, Inc 5000, Philly 100, and Smart CEO’s Future 50 lists. Tom guided the company through a successful rebranding in 2014 when they changed their name to LenCred.\r\n\r\nTom grew up in Marshalltown, Iowa and received his B.A. degree in Economics & Finance from Westmont College in Santa Barbara, CA. Currently, Tom lives in Blackwood, New Jersey with his wife Melanie and their three son's Aiden, Zander and Micah.","name":"Tom Gazaway","image":null,"slug":null,"social":{"facebook":"https://www.facebook.com/LenCredCorp","linkedin":"http://www.linkedin.com/in/tomgazaway/","twitter":"tomgazaway","website":"http://www.lencred.com"},"status":"disabled","title":null,"type":"Old BDC Member","user":{"imagePath":"https://staging.business.com/images/undefined","profile":{"company":"IntelliWare Systems","jobTitle":"Vice President of Client Services","website":""}}},"breadcrumbs":null,"channels":{"primary":{"name":"Finance","slug":"finance"},"sub":{"name":"Funding","slug":"funding"}},"meta":{"robots":"index, follow","description":"The key to the perfect business loan is communication and proper funding. Here are 5 questions your lender should ask you.","title":"Before the Business Loan: Questions That Must Be Asked - business.com"},"parsedContent":{"toc":[{"id":"how-much-money-do-you-need","title":"How much money do you need?"},{"id":"what-do-you-need-the-money-for","title":"What do you need the money for?"},{"id":"when-do-you-need-the-money-and-can-you-proceed-with-a-portion-of-the-funding-you-need","title":"When do you need the money and can you proceed with a portion of the funding you need?"},{"id":"give-me-the-cliff-notes-on-what-you-do-and-how-your-business-is-different-than-the-competition","title":"Give me the cliff notes on what you do and how your business is different than the competition"}],"json":[{"component":"p","children":["The key to a great borrower-lender relationship is communication and proper funding. Here are 5 questions your lender should ask you."]},{"component":"p","children":["So you need financing to get your business to the next level? One of two things has probably happened: you either went to a bank and they denied your loan request, or you know you don't want to waste your time because the banks rarely approve small business financing requests. We all know what happens next... hello internet."]},{"component":"p","children":["As your search begins, you'll find all kinds of impressive websites that convince you that your funding is just weeks or days (or even minutes) away. Of course you would be wise not to believe everything you read online but ultimately you'll likely end up speaking to some different people who try to sell you different financing packages and who offer to help you with your funding needs. To say that it could get confusing would be an understatement."]},{"component":"p","children":["You will likely encounter one of two different kinds of people. One is the \"sell you my stuff\" guy and the other is the business financing professional who seeks to help you find the best financing for you that either meets some or all of your financing needs."]},{"component":"p","children":["The \"sell you my stuff\" guy doesn't ask as many questions and likely will spend more time telling you about their awesome funding options. The business financing professional will have a few basic questions. Here are some basic questions that would be asked by someone who seeks to understand you and your needs before offering you a funding solution for your business."]},{"component":"h2","props":{"id":"how-much-money-do-you-need"},"children":[{"component":"strong","children":["How much money do you need?"]}]},{"component":"p","children":["This is a pretty obvious question. This one won't get missed too often; just don't let someone talk you into getting more money than you need. The only time that makes sense is when you're setting up lines of credit. Typically you don't get a loan until you need it but it's wise to set up lines of credit before you need them."]},{"component":"p","children":[{"component":"em","children":["Editor's Note: Looking for business loan? If you're looking for information to help you choose the one that's right for you, use the questionnaire below to have Business.com, provide you with information from a variety of lenders for free: "]}]},{"component":"RfqWidget","props":{"className":"bz-form-widget","id":"bz-form-widget-0","widgetCategoryId":"10128"},"children":[" "]},{"component":"h2","props":{"id":"what-do-you-need-the-money-for"},"children":[{"component":"strong","children":["What do you need the money for?"]}]},{"component":"p","children":["If you need to finance a big piece of equipment then it's likely that you'll want to get a lease or a loan to finance that equipment. Using a working capital line of credit is rarely a good use of funds for equipment since your lines of credit should normally be for shorter term needs and not for financing long-term debt. When you understand what you need the money for, it allows finance professional to think through lenders who like the kinds of transaction you're entering into. It also helps to know if a loan is best or if a line of credit would be more appropriate."]},{"component":"h2","props":{"id":"when-do-you-need-the-money-and-can-you-proceed-with-a-portion-of-the-funding-you-need"},"children":[{"component":"strong","children":["When do you need the money and can you proceed with a portion of the funding you need?"]}]},{"component":"p","children":["If you need $250,000 to start your business and it's needed for a variety of purposes then it's likely that you can take that financing in tranches or stages. So getting started with $100,000 will probably be fine for a few months or the first year. However, if you need $250,000 for a large piece of equipment then that's a totally different form of financing and you probably can't get anything done with $100,000."]},{"component":"p","children":[{"component":"strong","children":["Tell me about your personal credit"]}]},{"component":"p","children":["Don't forget this one. If you're in the early stages of getting your business off the ground sometimes this is all you've got. Be sure to treat your credit as an asset and remember that the better your credit is the more funding options you'll have -- and the lower the cost of those options. If you have a business that creates less than $10 million/year in revenues then your personal credit is probably going to matter."]},{"component":"p","children":["But what about those websites that says that your credit doesn't matter for a small business? Good question. There are definitely a large number of non-bank lenders out there who are willing to lend to people with damaged credit. Just remember that the money won't be cheap. There's a time and place for everything, but you're a small business owner so just remember that when your personal credit isn't good you'll pay for it many times over."]},{"component":"h2","props":{"id":"give-me-the-cliff-notes-on-what-you-do-and-how-your-business-is-different-than-the-competition"},"children":[{"component":"strong","children":["Give me the cliff notes on what you do and how your business is different than the competition"]}]},{"component":"p","children":["Sometimes I ask this question first and sometimes I ask it last. Entrepreneurs are famous for giving you an earful on this one, so I personally sometimes add the \"cliff notes\" part to help my clients get to the point. Naturally, the \"sell you my stuff\" guy is less interested in your business and more interested in \"closing a deal.\""]},{"component":"p","children":["The reason this question is so important is both to get the proper funding but also for communication with the lender. Finance professionals often work with a variety of lenders and act as a liaison between borrower and lender. It is important that they understand the borrower, their business and their needs so they can properly answer the questions from the lender."]},{"component":"p","children":["So as you're seeking the funding you need, be sure to pay attention to the guys and gals on the other end of the phone or email conversation. Are they asking questions to understand and assist, or did you get one of those \"sell you my stuff\" guys? It's confusing enough trying to get financing so plan on making the effort to find someone who will help you navigate the confusing terrain that's out there, and who has your best interest in mind and at heart."]},{"component":"p","children":[" ",{"component":"em","children":["Related Articles For Business Loans:"]}," ",{"component":"Link","props":{"href":"https://www.business.com/articles/how-to-choose-a-business-loan/"},"children":["How to Choose the Best Business Loan"]}]},{"component":"p","children":[{"component":"picture","props":{"className":"alignleft thumb"},"children":[{"component":"source","props":{"srcSet":"/images/content/5af/4720392a3a453198b456f/300_-185- 300w, /images/content/5af/4720392a3a453198b456f/150_-92- 150w, /images/content/5af/4720392a3a453198b456f/75_-46- 75w","sizes":"(min-width: 870px) 150px, (min-width: 400px) 38vw, 38%"}},{"component":"img","props":{"src":"/images/content/5af/4720392a3a453198b456f/1430-883-","alt":"Best Business Loan Comparison Guide","width":"1430","height":"883","data-content-img-id":"5af4720392a3a453198b456f"}}]}]},{"component":"p","children":[{"component":"Link","props":{"href":"https://www.business.com/categories/small-business-loans-and-financing-options/","rel":"noopener external"},"children":["Best Business Loan Comparison Guide"]}," - Business.com"]},{"component":"p","children":["Looking for the best small business loan service? We have expert reviews and feature comparisons of the top business loan providers."]},{"component":"p","children":[" "]},{"component":"p","children":[{"component":"picture","props":{"className":"alignleft thumb"},"children":[{"component":"source","props":{"srcSet":"/images/content/5af/467e01039eb0f278b456e/300_-200- 300w, /images/content/5af/467e01039eb0f278b456e/150_-100- 150w, /images/content/5af/467e01039eb0f278b456e/75_-50- 75w","sizes":"(min-width: 870px) 150px, (min-width: 400px) 38vw, 38%"}},{"component":"img","props":{"src":"/images/content/5af/467e01039eb0f278b456e/280-187-","alt":"","width":"280","height":"187","data-content-img-id":"5af467e01039eb0f278b456e"}}]}]},{"component":"p","children":[{"component":"Link","props":{"href":"https://www.business.com/articles/government-loans-for-entrepreneurs/","rel":"noopener external"},"children":["What Government Loans are Available to Entrepreneurs?"]}," - Business.com"]},{"component":"p","children":["Several loan programs are available to startups and growing businesses, as we found when we went looking for an answer to Business.com user Jenny Simon's question."]},{"component":"p","children":[" "]},{"component":"p","children":[{"component":"Link","props":{"href":"https://www.business.com/articles/how-to-start-a-business-without-loan/","rel":"noopener external"},"children":["How to Start a Business Without a Loan?"]}," - Business.com",{"component":"picture","props":{"className":"alignleft thumb"},"children":[{"component":"source","props":{"srcSet":"/images/content/5af/46b3951ee471c518b4589/300_-300- 300w, /images/content/5af/46b3951ee471c518b4589/150_-150- 150w, /images/content/5af/46b3951ee471c518b4589/75_-75- 75w","sizes":"(min-width: 870px) 150px, (min-width: 400px) 38vw, 38%"}},{"component":"img","props":{"src":"/images/content/5af/46b3951ee471c518b4589/280-280-","alt":"","width":"280","height":"280","data-content-img-id":"5af46b3951ee471c518b4589"}}]}]},{"component":"p","children":["Debt isn't the only way! Here are alternatives to getting a loan in order to start your business."]},{"component":"p","children":[" "]},{"component":"p","children":[" "]},{"component":"p","children":[" "]},{"component":"p","children":[" "]}]},"resource":null,"sponsorship":null,"thumbnail":{"path":null,"caption":"Utah778 / Getty Images","isBlurred":false},"bestPicks":null},"related":{"relatedArticles":[{"title":"Before the Business Loan: Questions That Must Be Asked","canonical":"https://www.business.com/articles/before-the-business-loan-questions-that-must-be-asked/","slug":"before-the-business-loan-questions-that-must-be-asked","thumbnail":"https://www.business.com/images/channel/finance.jpg","dek":"The key to a great borrower-lender relationship is communication and proper funding. Here are 5 questions your lender should ask you.","lastModified":"2015-02-18T18:00:00Z","published":"2015-02-18T18:00:00Z","sponsored":false},{"title":"Fast Cash: 12 Quick Ways to Raise Some Dough","canonical":"https://staging.business.com/articles/12-quick-ways-to-raise-cash/","slug":"12-quick-ways-to-raise-cash","thumbnail":"https://staging.business.com/images/content/546/2756ccb786b96a08b4618/1500-0-","dek":"Sometimes your business needs just a little bit more cash to make it through. Here are some ways you can quickly raise some cash.","lastModified":"2019-07-31T20:58:09Z","published":"2014-11-12T17:00:00Z","sponsored":null},{"title":"Fast Cash: 12 Quick Ways to Raise Some Dough","canonical":"https://www.business.com/articles/12-quick-ways-to-raise-cash/","slug":"12-quick-ways-to-raise-cash","thumbnail":"https://www.business.com/images/channel/career.jpg","dek":"Sometimes your business needs just a little bit more cash to make it through. Here are some ways you can quickly raise some cash.","lastModified":"2014-11-12T17:00:00Z","published":"2014-11-12T17:00:00Z","sponsored":false},{"title":"Your Guide to Creating a Small Business Marketing Plan","canonical":"https://www.business.com/articles/sample-marketing-plan-outline-and-template/","slug":"sample-marketing-plan-outline-and-template","thumbnail":"https://www.business.com/images/content/5f3/3e1765a215eb62d8b4567/1500-0-","dek":"Follow these templates and guidelines to get started on creating your business's marketing plan.","lastModified":"2020-08-12T12:28:00Z","published":"2018-03-02T13:00:00Z","sponsored":false},{"title":"Marketing Fail: 5 Customers That Want to Destroy Your Business","canonical":"https://staging.business.com/articles/5-customers-that-want-to-destroy-your-business/","slug":"5-customers-that-want-to-destroy-your-business","thumbnail":"https://staging.business.com/images/content/549/06bad2f87b1f7468b45d1/1500-0-","dek":"How do you attract loyal customers who are a pleasure to do business with, while repelling customers that want to destroy your business?","lastModified":"2019-07-31T20:58:05Z","published":"2014-12-16T16:00:00Z","sponsored":null},{"title":"Marketing Fail: 5 Customers That Want to Destroy Your Business","canonical":"https://www.business.com/articles/5-customers-that-want-to-destroy-your-business/","slug":"5-customers-that-want-to-destroy-your-business","thumbnail":"https://www.business.com/images/channel/marketing.jpg","dek":"How do you attract loyal customers who are a pleasure to do business with, while repelling customers that want to destroy your business?","lastModified":"2014-12-16T16:00:00Z","published":"2014-12-16T16:00:00Z","sponsored":false},{"title":"Getting By Without a Business Loan","canonical":"https://staging.business.com/articles/getting-by-without-a-business-loan/","slug":"getting-by-without-a-business-loan","thumbnail":"https://staging.business.com/images/content/54c/93fd12f87b15d058b45c5/1500-0-","dek":"Some of the best businesses start in garages. Here are 5 ways to bootstrap your small business without getting a loan.","lastModified":"2015-01-28T22:00:00Z","published":"2015-01-28T22:00:00Z","sponsored":null},{"title":"5 Ways to Make Your Business Look Bigger","canonical":"https://staging.business.com/articles/5-ways-to-make-your-business-look-bigger/","slug":"5-ways-to-make-your-business-look-bigger","thumbnail":"https://staging.business.com/images/content/545/7cc02c9786b81648b45fc/1500-0-","dek":"Here are five tips to make your small business appear bigger than it actually is. No misrepresentation—just good marketing.","lastModified":"2014-11-04T17:00:00Z","published":"2014-11-04T17:00:00Z","sponsored":null},{"title":"The Essential Checklist: Must Do's When Starting an E-commerce Website","canonical":"https://staging.business.com/articles/must-dos-when-starting-an-e-commerce-website/","slug":"must-dos-when-starting-an-e-commerce-website","thumbnail":"https://staging.business.com/images/content/554/cc8a33287b156268b4578/1500-0-","dek":"Whether you’re starting an E-commerce yourself or going through a development team, we've laid out some of the most important steps for you.","lastModified":"2019-07-31T20:57:45Z","published":"2015-05-08T20:00:00Z","sponsored":null},{"title":"The Essential Checklist: Must Do's When Starting an E-commerce Website","canonical":"https://www.business.com/articles/must-dos-when-starting-an-e-commerce-website/","slug":"must-dos-when-starting-an-e-commerce-website","thumbnail":"https://www.business.com/images/channel/business-basics.jpg","dek":"Whether you’re starting an E-commerce yourself or going through a development team, we've laid out some of the most important steps for you.","lastModified":"2015-05-08T20:00:00Z","published":"2015-05-08T20:00:00Z","sponsored":false},{"title":"Effective Options for Raising Capital for Your Startup","canonical":"https://staging.business.com/articles/effective-options-for-raising-capital-for-your-startup/","slug":"effective-options-for-raising-capital-for-your-startup","thumbnail":"https://staging.business.com/images/content/54f/de59d3087b161018b458f/1500-0-","dek":"There’s never been a better time to be a savvy entrepreneur. Here is the most effective way to raise captial for your startup.","lastModified":"2015-03-09T21:00:00Z","published":"2015-03-09T21:00:00Z","sponsored":null},{"title":"The Top 10 Qualities That Define An Entrepreneur","canonical":"https://www.business.com/articles/the-top-10-qualities-that-define-an-entrepreneur/","slug":"the-top-10-qualities-that-define-an-entrepreneur","thumbnail":"https://www.business.com/images/channel/business-basics.jpg","dek":"How do you know if you're an entrepreneur? Well for starters, here are the top 10 qualities that define an entrepreneur.","lastModified":"2015-04-28T19:00:00Z","published":"2015-04-28T19:00:00Z","sponsored":false}],"relatedReviews":[{"doc_type":"category","thumbnail":"https://staging.business.com/images/rz/5e46e2fc5a215eab4d8b457c/taxes_pano_Prostock-Studio_getty.jpg","canonical":"https://staging.business.com/categories/best-tax-debt-relief-services/","title":"The Best Tax Debt Relief Services of 2021","dek":"Looking for the best tax debt relief service? We have easy-to-read, unbiased expert reviews and feature comparisons of the best and cheapest services.","slug":"best-tax-debt-relief-services","lastModified":"2021-03-23T20:42:00Z"},{"doc_type":"category","thumbnail":"https://staging.business.com/images/rz/5dfbca819c658adc118b4568/Payroll_AndreyPopov_Getty.jpg","canonical":"https://staging.business.com/categories/online-payroll-services/","title":"The Best Online Payroll Services of 2021","dek":"Our team has compared the best online payroll services for 2021. See up-to-date reviews and costs for the top services.","slug":"online-payroll-services","lastModified":"2021-03-19T20:05:00Z"},{"doc_type":"category","thumbnail":"https://staging.business.com/images/rz/5df3d8695a215e58428b4570/POS_GETTY_DERO2084.jpg","canonical":"https://staging.business.com/categories/best-pos-systems/","title":"The Best POS Systems of 2021","dek":"Before you choose a POS system, check out our reviews of the best picks for 2021. ","slug":"best-pos-systems","lastModified":"2021-03-17T17:33:00Z"}],"relatedSponsoredArticles":null}},"pageContext":{"displayModified":"2015-02-18T18:00:00.000Z","template":"v1","title":"Before the Business Loan: Questions That Must Be Asked","meta":{"robots":"index, follow"},"docType":"articles","slug":"before-the-business-loan-questions-that-must-be-asked","canonical":"https://staging.business.com/articles/before-the-business-loan-questions-that-must-be-asked/","skipTOC":false}},"staticQueryHashes":[]}
![\"\"](\"/images/content/5af/467e01039eb0f278b456e/300_-200-)
![\"\"](\"/images/content/5af/46b3951ee471c518b4589/300_-300-)