Questions to ask before accepting finance

Put proposals side by side

Ask each provider for a written proposal for the same equipment, amount and term. A quoted rate is not enough to compare the complete cost. A flat rate and an annual percentage rate are different measures; ask the provider to explain the basis.

• Who is the borrower, and who is the lender or lessor?
• How much reaches the supplier or business, and when?
• What is payable upfront, including deposit, VAT and fees?
• What are all scheduled payments and the total payable?
• Is interest fixed or variable, and are there final payments?
• What does the broker earn, and is there a separate borrower fee?
• Who owns the equipment during and after the agreement?
• What happens if equipment delivery or studio opening is delayed?

Read guarantees separately

A personal guarantee can make a director responsible when the company cannot meet covered obligations. An unsecured business loan may still require a personal guarantee. Ask about the limit, security, release conditions and whether liability continues after a change of ownership.

Take independent advice on obligations you do not understand before signing, particularly personal guarantees. Do not treat a broker estimate or a soft enquiry as approval.

Check early exit and complaints

Get the settlement method, early repayment charges and any lease return requirements in writing. Ask who handles complaints and what protections apply to your exact borrower type and agreement. Business finance arrangements do not all carry the same protections.