You’re probably familiar with the fact that small-business financing offers to follow you around like a shadow. There are countless proposals from potential lenders with silly names sent via e-mail and banner ads. It’s normal to be skeptical. Rob Stephens, CPA, founder of financial planning firm CFO Perspective says that you shouldn’t trust everything a lender says on its website. There are always new companies that aren’t sustainable. A lender should provide outstanding service for the entire term of the loan. Finance experts were consulted to help you find the best loan for your company.
Start with the SBA. The Small Business Administration website is a must-see. Although government loans often offer lower rates and longer payment terms, getting one can be difficult and time-consuming. Keith Chulumovich is a CPA and managing director of O’Keefe’s financial consulting company. He says that many programs are more complicated than banks. “Qualification requirements can be too burdensome and time-consuming.
Refer others. At least three different loan options should be considered. First, Chulumovich advises that you consult with accountants or attorneys.
Do your research on online lenders. Unfortunately, many websites offer attractive rates and make you think they are registered loan agents, lending platforms, or loan marketplaces.
Google will return reviews from others who have used Reddit and “[name] lender” on its search results. You can also confirm the legal incorporation of the company in your state by searching the web. (A company’s financial documents will show you which state.
Compare the loan options. Scissons says that focusing solely on the interest rate is a standard error. Scissons suggest some points: Additional fees, Term length, Collateral requirements, Reporting restrictions, and any rules regarding debt repayment. She says that each loan has its repayment terms. Are you allowed to pay this loan off sooner? Is it possible to pay interest and principal over time, or large principal repayments at the end?
Consider the implications for your business. Be sure to carefully consider the monthly impact of the loan on your bank accounts and operations before you decide to pull the trigger. Kirsha Campbell (CPA) is president of The Cash Lab, a business accounting consultancy. This covers liquidity, solvency, cash flow, and the logistics of repaying the loan each month. It is possible to discover, for example, that one lending platform doesn’t connect with your bank’s portal or that your quarterly repayment timings better match your cash flow.
Look for a lender that offers many services to businesses. It can be a great idea to have a long-term relationship built with a banker for your business. You can get a wide range of financial services, as well as undiscovered benefits. You’ll often receive the lowest rates and can reduce your wait time to borrow money by as much as two weeks. Stephens says that you need someone who will be patient and willing to help you through difficult times. This can prove crucial in times when your company is struggling. “Find a lender with who you can establish a real business relationship with.”