If you have ever started a small business, you are well aware that you get many offers for business financing. These proposals come in the form of e-mails, banner ads, and your accounting software. However, you are right to be skeptical. Rob Stephens, CPA, and founder of CFO Perspective financial planning company, advise that you don’t just believe what the lender says on their website. “Companies constantly appear that don’t work. You want a lender who will give you excellent service all through the loan’s life. We spoke to finance professionals about how to find a wise loan for your business.
Start with SBA. It’s easy to check the Small Business Administration’s website. Many government loans offer lower rates, longer terms, and more flexible payment terms. However, the process of getting one can be slow and involve a lot of bureaucracy, according to Keith Chulumovich, CPA, managing director at O’Keefe financial consultancy company. “Many programs can take much longer than banks,” Chulumovich says. “The qualification requirements can be excessively complicated and time-consuming.”
Refer to others. Consider at least three loan options coming from different sources. First, Chulumovich recommends consulting with accountants and attorneys. They have dealt with thousands of loans, some great, some terrible, and can recommend reputable lenders, sources of grants, or community credit programs.
Do your research on internet lenders. Many websites offer attractive rates and claim to be registered loan brokers, lending platforms, loan marketplaces, etc. However, Scissons suggests that you be on the lookout for fraudulent lenders as well as fraudsters who claim to represent legitimate lenders.
For any litigation involving the lender, it pays to check the Enforcement Actions Search Tool of the U.S. Office of the Comptroller of Currency. Google search for “[name] lender reviews” will give you the experience of others on sites such Reddit. Many states also have websites to confirm that the company has been legally registered in the U.S. (A company’s financial documentation will reveal which state).
Compare your loan options. Scissons warns that it is common to be focused on the interest rate. She recommends six factors to be considered: the amount offered, additional fees, and term length. Collateral is required. Reporting restrictions are also necessary. She stated that repayment terms for each loan are different. Are you allowed by law to pay off the loan sooner? Are you paying principal and interest throughout the loan or just a tiny amount at last?
You should carefully consider the impact on your business. Take the time to consider the impact the loan will have on you and your bank accounts month-to-month before you decide to go ahead with the loan. Kirsha, CPA and president, The Cash Lab, is a CPA who says that you should “access its impact on the business.” This includes liquidity and solvency as well cash flow. It also covers the logistics of paying each month’s loan. You may find one lending platform that does not connect to your bank’s interface or that your quarterly repayment timing is more in line with your cash flow.
A lender that offers many business services should be considered. It is possible to build a lasting relationship with your banker. This relationship can offer several financial services as well as unseen benefits. For example, you may get the best rates and reduce your loan waiting time by up to two weeks. This is crucial for companies that have to stumble.” Find a lender you can trust and build a lasting business relationship.
