Is your small business currently searching for the right business financing to suit your company’s core needs? Although every business may have to go through the process of applying for financing at some point, there are a few clarifying questions you may need to ask yourself first to ensure that you apply for the right type of funds for your situation. From identifying your currently underfunded expenses to balancing your budget and more, here are three key questions that you should work through before putting in a loan application for your small business.

1. What Kind of Loan Does Your Company Need?

Before you can fill out a loan application, you’ll have to decide what your company needs funding for. The projects or items you’ll be spending the loan money on can narrow down and determine the sorts of loans you may qualify for. Consider, for instance, whether your business needs financing to support or finance:

  • Commercial real estate
  • Merchandise and inventory
  • New employee hiring
  • Corporate expansion
  • Rebranding and new marketing efforts

2. Can You Afford To Make the Monthly Loan Repayments?

Simply calculating how much of a loan you need to afford real estate, merchandise, or other aspects of your business is not the only financial consideration to keep in mind before applying for a loan. It’s important to make sure that you can afford to make monthly loan repayments without stretching yourself thin or cutting funds away from other important areas of the company. Before you sign on the dotted line for any loan, do the math and make sure that the estimated monthly repayment:

  • Is comfortably affordable for the company
  • Won’t cause you to cut into profits
  • Won’t lead to bankruptcy

3. Is Your Desired Loan Type Appropriate for Your Business’s Needs?

Finally, do some research on the different loan options available to your company. Different types of loans may be more or less appropriate to different corporate structures and business needs. Some of the most widespread loan types usually include:

  • Conventional bank loans
  • Hard money loans
  • Business lines of credit
  • Private financial backing

In some cases, finding and securing the right business financing can make all the difference for a company. If your small business is currently searching for potential loans or other sources of funding, it’s important to understand what you can afford to pay back and what types of loans you may need. By working through this quick list of essential questions, you can help save yourself some time down the road and identify the types of financing your small business could use.

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