Choosing Among Different Lenders

business fundingFinding financing can be difficult for a small or mid sized business and requires a lot of working supporting your financial statements, projections, and obtaining the right amount of financing for your borrowing needs. However, even once this is done there is sometimes the challenge of selecting between two or more potential lenders. This article will provide some basic advice for considerations that you should have when you are choosing among different lenders. Factoring companies similar to ( have many alternative financing options available.

It is important to think of a lender as a business partner of sorts that is entering into a loan to your business for your mutual benefit. While a lender is expected to earn a return in the form of interest equal to the risk that they are assuming when compared to what is available on the market, how they treat your relationship is one of the signs regarding which bank lender would be best for you. If they install a lot of punitive factors into your loan that may bind your hands and limit your ability to repay your debt or grow your business, the sign is that they don’t perceive you as a partner and rather simply as a payer of interest. However, to the contrary, if they help you to undertake steps that improve your internal controls and manage your cash flow better, thereby leading to a stronger overall business plan that improves your business as well as your ability to repay their loans, you may be dealing with a high quality lender who views your firm well and will serve as a high quality business partner.

To determine how serious of a role they want to play with your business see how well they know the industry and how well they are interested in learning your company’s story as well as how your company is different than the other companies in the industry. Learning what makes your company different is a large step towards learning how to work with you. See how sincere they are to your concerns and try to have an open and honest dialogue regarding the challenges you are facing in the marketplace. The idea is not to get one past a potential lender and borrow money that you have no hopes of repaying, but rather to get a workable loan that helps your business to thrive and repay the debt. Make sure both you and the lenders understand this and are willing to consummate a relationship that considers these factors.

Simply taking the largest loan with the lowest interest rate is not the answer. Seek out a bank lender who is interested in your business and that wants to work with your company in order to get the best of both worlds; a happy and sincere lender and the levity to run your business with the capital and freedom to reach your desired goals. Find a business partner and not just a lender.