Surreal magnifying lens examining business funding terms and payment structures
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Questions to Ask a Business Funding Provider
Ask the same questions for every option and request written answers in the final agreement or disclosure. A verbal explanation should not replace the contract.
Cost and proceeds
- How much cash will the business actually receive after every withheld fee?
- What is the total amount expected to be repaid if payments are made as scheduled?
- Is pricing expressed as an interest rate, APR, factor rate, fee, or another method?
- Can the provider show every origination, documentation, closing, appraisal, filing, and servicing charge?
Payments and flexibility
- What is the payment amount, frequency, first payment date, and final scheduled date?
- Is the rate or payment fixed, variable, seasonal, or tied to revenue?
- What happens if the business pays early, pays late, or needs a temporary modification?
- Does renewal create a new fee, refinance an existing balance, or change the total repayment?
Risk and provider identity
- Will the provider take collateral, a blanket lien, or a personal guarantee?
- Will the application involve a hard credit inquiry, and whose credit will be reviewed?
- Who is the legal creditor or purchaser, who services the account, and who handles disputes?
- What events constitute default, and what remedies does the agreement permit?
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