You can’t expect the right loan to simply appear before your eyes. It takes a bit of searching and decision-making to find what you are looking for. Here are 5 steps that will put you on the path
to finding the best option out there.
Start in Advance
Get Serious About the Application Process
Some business loan applications can be notoriously burdensome, so if you want to make the most of your time, follow these tips:
- Do your best to truly understand every question you are answering.
- Be truthful and accurate. Lenders will use documentation to verify your answers down the road.
- Be thorough, as this will lessen the likelihood of a delay.
- Provide any follow-up information that is requested as quickly as possible.
Get Multiple Offers
The best thing you can do for your business is get offers from multiple lenders, making them compete for your business. With multiple offers, you have room to compare the advantages and disadvantages of each one, eliminating lenders until you make a final decision. Often, if you have an offer on the table from one lender, and you’re able to tell another lender that, you might be able to get them to lower their interest rate, or perhaps waive something like their origination fee. If they have approved you, and decided they want to work with you, there is absolutely no harm in negotiating to ensure they have, in fact, put their absolute best offer forward.
Know Your Options
Gone are the days of simple term loans and lines of credit. You now have more options than ever available to your business. Before you get started, make sure you have an idea of the product you want. Products are unique based on their terms, rates, payment structure, and collateral. You have to decide which type of product best suits your financing needs.
Answer the Tough Questions
Every company that applies for a loan is doing so for the same reason: they need capital. Some need the money to purchase new equipment. Others need it to make payroll. And the list goes on and on. While the end goal may be the same for every company, there are questions you must answer that are specific to your situation. The answers to these questions will make sure you find the best product and lender for your business:
- How much money do you want to borrow? Many lenders and products have maximum and minimum loan amounts, so you want to make sure they can handle your loan request.
- When do you need to secure the loan? Some lenders are able to fund borrowers in a matter of days, while others can take weeks or months. Generally speaking, the longer the term of the loan (and the lower the cost), the longer it will take you to secure the funds.
- Why are you looking to borrow money? If you need money to buyout a partner or acquire a new business, you will have a harder time finding a loan than if you wanted to expand your business or launch a new marketing campaign. Some lenders will only work with certain loan purposes, so you need to clarify this with any lender you’re considering.
- What other type of business debt are you carrying? If you currently have business debt, you may have trouble securing a 2nd loan. Not only does this tie up more of your cash, but many lenders may not want to take 2nd position to another lender. If you already have a business loan, be sure to tell the lender before starting.