Applying for a loan might have you feeling like you and your business are on trial. However, the same goes for alternative lenders: they’re under similar pressure to prove their mettle. As a potential client, you’ve got more power than you realize when browsing for your next loan.
How do you know when you’ve found a good alternative lender? Ask the right questions, and you’ll uncover whether or not a particular lender is the right fit for your business. We’ve rounded up 9 questions to get you started.
“Who is your ideal customer?”
This question gives you and your lender an opportunity to arrive on the same page and clarify expectations. Alternative lenders serve all kinds of industries—this particular lender may very well have financed businesses in your niche, with your history, and with your funding needs. Your ideal lender will understand how to read your particular application and match you with the right loan product. If a lender’s answer to this question sounds nothing like your business, they may be ill-equipped to finance you this time around.
“What qualifications do you look for?”
Don’t expect to get a point-by-point breakdown of your lender’s underwriting criteria, but feel free to ask for an overview of how you’ll be evaluated. Listen for criteria like credit history, outstanding liens or current debts, time in business, debt service coverage ratios, etc. The answer to this question should play a primary role in your decision to move forward with a prospective lender, so don’t be shy.