Quick answer
Before signing a business loan, ask the lender for the total of all repayments and every fee in writing, how and when repayments are taken, what security and guarantees are required, how early payout is calculated, what counts as default and what it costs, what conditions apply before funding, whether terms can change, and who to contact if problems arise. Clear written answers are a good sign.
Key points
- Get every answer in writing, not just on a call.
- Ask the same questions of every lender to compare fairly.
- Vague answers about cost or security are a warning sign.
- Questions about default and payout matter as much as price.
Checklist
- Cost and fees questions answered in writing
- Repayment questions answered
- Security and guarantee questions answered
- Exit and default questions answered
- Conditions and timing confirmed
The quality of a business loan decision depends heavily on the quality of the questions asked before signing. Lenders answer what they are asked; they rarely volunteer the uncomfortable details. This list, part of our offer review series, covers the questions that matter most. Copy it into an email, send it to each lender you are considering, and compare the answers side by side.
About the cost
- What is the total of all repayments, including any balloon or final payment?
- What is every fee, when is it charged and how much is it? Include establishment, documentation, valuation, legal, monthly, line, dishonour, variation, early repayment and discharge fees.
- Are any fees deducted from the loan amount? How much cash will actually reach my account?
- Can the cost or fees change during the loan? If so, how and with how much notice?
- How is interest or cost calculated? Daily on a reducing balance, a fixed total, or something else?
Use the answers in the true cost calculator to see the cost in dollars.
About repayments
- How often are repayments taken, and on what day?
- When does the first repayment come out?
- What happens if a repayment fails? What fees apply, and how quickly do you contact me?
- Can repayments be adjusted if trade drops? Are hardship or variation options available?
- Can I make extra repayments, and how are they applied?
About security and guarantees
- What security is required, and over which assets?
- Will a general security agreement be registered? Does it include future assets?
- Who needs to give a personal guarantee? Is it limited to an amount or to this loan only?
- Will anything be registered on a property title?
- How and when will security be released when the loan is repaid?
Our guides to security and GSAs and personal guarantees explain why these matter.
About leaving early and default
- How would an early payout be calculated? Can you give an example halfway through the term?
- Are there break costs or minimum terms?
- What events count as default, apart from missed repayments?
- What happens on default: default interest, fees, enforcement steps and notice periods?
- Does a default on another loan trigger a default on this one?
See our guide to payout figures and to reading a loan contract.
About conditions, timing and service
- What conditions must be met before funds are released?
- When can funds realistically be in my account?
- What ongoing reporting do you need, such as annual financial statements?
- Who is my contact during the loan, and how do I reach them?
- How do you handle complaints or disputes?
Reading the answers
Good answers are specific, written and consistent with the contract. Watch for vague replies about cost or security, reluctance to give a payout example, or answers that change between phone and email. Our list of business loan red flags covers the warning signs to look for.
Using the answers to compare
When you have written answers from two or more lenders, put the numbers into the offer comparison calculator and lay the terms side by side. Our guide to comparing two loan offers explains how to weigh price against risk.
A short version for busy owners
If you only have time for five questions, ask: what is the total of all repayments plus every fee; how much cash will I receive; what security and guarantees are required; how is early payout calculated; and what counts as default. Those five answers cover most of what decides whether a loan is right for you.
An illustrative example
A made-up physiotherapy practice sends this list to two lenders. One replies within a day with every answer in writing and a payout example. The other answers cost questions but avoids the security and default questions twice. The practice owner chooses the first lender, even though its price is slightly higher, because she knows exactly what she is agreeing to.
Questions for property-secured loans
If property is involved, add these: Who orders and pays for the valuation, and is it refundable if the loan does not proceed? What maximum loan-to-value ratio applies to this property? Will the lender take a caveat, a first mortgage or a second mortgage? Is consent needed from my existing mortgage lender? Is interest paid monthly, prepaid or added to the loan? And what happens if the planned sale or refinance takes longer than the term?
Questions for equipment and vehicle finance
For asset finance, ask: Is it a chattel mortgage, lease or hire purchase, and who owns the asset during the term? Is there a balloon or residual, and how was it set? What insurance must I hold? Can I sell or trade the asset before the end of the term, and what would that cost? Are there restrictions on modifying, moving or subletting the asset?
Questions about your own situation?
If you want to talk through options before you are at the offer stage, make one enquiry. There is no credit check when you first enquire, a real person reviews it and your details go to one lending partner rather than a crowd. You are welcome to ask any of these questions in your enquiry or on the first call.
Frequently asked questions
Will a lender mind if I ask a lot of questions?
A reputable lender expects questions and should answer them clearly. If a lender is reluctant to explain costs, security or default terms, treat that as a warning sign.
Should I ask questions by email or phone?
Phone is fine for discussion, but ask for key answers in writing, especially cost, security, guarantees and payout. Written answers can be compared and relied on.
Which questions matter most?
Total cost including fees, security and guarantees, and early payout and default terms. These determine both what the loan costs and what you could lose.
What if the answers differ from the contract?
The contract applies. Ask the lender to correct the contract or explain the difference before you sign.
Can my accountant ask these questions for me?
Yes, with your permission. Many owners find it useful to have their accountant review the answers and the offer.
What should I do if a lender won't answer in writing?
Treat it as a warning sign. Explain that you need written answers to compare offers and make a decision. If the lender still declines to put key terms such as cost, security and payout in writing, consider other options.
Sources and further reading
We are an information site, so we do not rank lenders, publish interest rates or accept payment to feature a product. Every page is written and checked by our editorial team against official sources. Read our editorial policy and how we are funded.
