15 Questions to Ask Before Accepting Funding

Every funding offer looks good at first glance. The amount is bigger than you had hoped, the timeline is short, and the person on the phone sounds confident. The problems tend to live in the details that were not volunteered: a fee deducted from the proceeds, a payment that falls on a holiday week, a clause that lets the funder do something you did not expect.

Questions are how you surface those details, and there is nothing impolite about asking them. A reputable funding partner or broker expects them. This list is organized into five groups: cost, payments, protections, obligations and next steps. Take it into your next conversation, get answers in writing and, for legal or tax implications, run the agreement past your attorney or CPA.

Questions about total cost

Cost is not one number, and it is rarely the number in the headline. These first questions pin it down.

A useful habit is to ask for the answer as a dollar figure whenever possible. Percentages and factors sound precise but hide the scale, while a number like $78,000 total payback on $60,000 funded is concrete and comparable. Ask the same cost questions of every funding partner so the answers line up.

Fees deserve special attention. Some are taken out of the funded amount, which means you repay on money you never received. If you are approved for $50,000 and a $2,500 fee is deducted, you receive $47,500 but repay based on $50,000. That is not necessarily a deal-breaker, but you should see it before you sign.

1. What is the total amount I will repay, in dollars, over the full term?
2. What fees are deducted from the funds, such as origination, underwriting or administrative fees, and what is the net amount I will actually receive?
3. If this is a factor-rate product, what is the factor, and how does it translate into a rough annualized cost for comparison purposes?

Questions about payments

Payment mechanics shape your daily life more than the contract headline. Say a $60,000 advance at a 1.30 factor rate has a payback of $78,000. Over 8 months of roughly 170 business days, that is about $459 per business day, which has to come out of operating cash. These questions make that tangible.

It is also fair to ask about the holiday and weekend calendar. Daily debits happen on business days, so a week with a bank holiday is compressed. A payment that looks comfortable on paper can feel heavy during a short week if your deposits cluster on a weekend.

If the product is a line of credit or term loan, ask the equivalent questions: is the rate fixed or variable, how is interest calculated, and is there a draw fee or maintenance fee.

1. How often is payment collected, and by what method: ACH debit, a percentage of card sales or something else?
2. What is the exact payment amount, and does it change if my sales change?
3. What happens in a week when revenue falls short, and is there any relief process or reconciliation option?

Questions about protections

Here you learn what you can count on if the plan does not go perfectly.

Protections are where language gets technical, so do not hesitate to ask the funding partner or your attorney to explain in plain terms. If you do not understand a clause well enough to explain it to your business partner, you do not understand it well enough to sign it.

1. Is there a personal guarantee, and what exactly does it cover?
2. Is there a UCC lien filing, and against which assets?
3. Is there a confession of judgment or similar clause, and is it enforceable in my state?

Questions about obligations and flexibility

A good agreement leaves you room to adapt. These questions reveal how much.

1. Can I pay off early, and if so, is there a discount or is the full payback still owed?
2. Can I take other funding or change my bank account while this is open, and what happens if I do?
3. What events count as a default, and what are the consequences of each?

Questions about the relationship and what comes next

Finally, check who you are dealing with and what the sequence will be. If you are working through a broker, a straight answer here is a sign of good practice.

1. Who is the actual funding partner, and how are you or the broker compensated?
2. What documents do you still need, and what is the timeline until funds arrive?
3. Can I have the full agreement in writing to review before I sign anything?

How to use the list

You do not have to ask all fifteen on the first call. Ask the cost and payment questions at the start, since they decide whether an offer is even worth your time, and keep the protection and obligation questions for the final review. Write down the answers and compare offers in a simple grid so you can see them side by side.

At Fidelity Funding, a funding specialist reviews options with you and is happy to go through questions like these. We connect you with funding partners and cannot promise an approval, price or timeline, but you should leave every call understanding what you would be agreeing to. If an answer is vague, evasive or changes between conversations, treat that as information. Our guide to predatory lending red flags covers what to watch for.

This article is for general information only and isn’t financial, legal or tax advice. Funding approval, amounts and terms are set by funding partners and depend on underwriting.