5 Tips For Getting A Better Business Loan
Thru the power of the internet, prospective business loan borrowers can obtain business loans through an online application, this begs the question: Does it matter if your Lender is on-line or off-line?
Business owners beware!
When you’re taking a business loan, you’re placing your future opportunities on the line! You are obligating your business and yourself to repay the loan, but at what costs?
While obtaining a business loan online might be fast, easy, and a convenient way to get a loan–it could also be the most expensive! This is detrimental to your business cash flows.
There are many articles in the mainstream media and in industry-driven publications that spin stories on how “online marketplace” lenders are going to take over the banking and traditional lending industries. Hundreds of internet ads pushing business owners to apply for “fast business loans” and discouraging business owners from pursuing traditional financing. Don’t be tricked!
There is no doubt that the internet has had a dramatic impact on these industries, but guess what–many businesses are still going to the bank, still using loan brokers, and are still obtaining traditional financing from non-bank lenders. Why? Because it makes good business sense!
Business loan costs.
The most important thing for a small-business owner to realize is that it doesn’t matter where their loan is coming from or how sexy or simple the process is. What matters is that each business owner gives themselves the time to make an informed and intelligent decision about the costs of obtaining business financing.
Do you know how expensive your business loan is?
The online ads can be compelling. Some of the online lenders/brokers actively promote a “Lowest Rate Guarantee” but read the fine-print! It’s only for online lenders.
Some of these online lenders are offering short-term on-line financing with APR’s of 57–100 %!
Informed business owners under most circumstances would never agree to this sort of ‘pay-day’ loan arrangement for their business. Especially when they understand that with a few extra weeks of work they can obtain a revolving loan from an off-line alternative lender with an all in APR in the low 30′s. This offer is far from ideal, but it’s much better than the previous offer.
Even better! When business owners find out that they can obtain an annually renewing revolving line of credit from a reputable bank or traditional lender with an all in APR that is less than 15%, or that they can obtain an SBA loan for less than 8% APR, they realize that traditional lending compared to the alternatives makes good economic sense!
The Five Tips!
- Don’t wait for an emergency! Minimize your downside risks and the upside will take care of itself! The best time to get a loan is when you don’t need one.
- Don’t buy the hype! If it sounds too good to be true–it is. No such thing as a free lunch.
- Contain the costs! The difference between a few weeks and a few hours of work could be tens of thousands of dollars a month.
- Know your market! Get with the lender that understands your business and build up that relationship.
- Get expert advice! Speak with at least one professional advisor or mentor before accepting an offer. They may provide invaluable insight!
As a final note, don’t be shy or bashful. Building a business is hard work. There are times when capital will be needed. Sometimes the reasons are to support growth and other times the unexpected happens. You are not alone! We are here to help! So get the support you deserve and don’t let a bad loan ruin your business!