A small business loan is a must have for any small business these days. Whether this loan is to help you with building credit, purchase items for your business or the like, there are not many business who have not at one time or another utilized a loan. A loan can come from several sources. Some business choose to allow investors in order to get the money that they need. However, more businesses turn to banks or credit unions for their loan. For those who are looking into a small business loan, the following aspects can help you to decide which the best option for your needs is.
The Business Loan Terms
Never sign something, such as a loan, without reading all the fine print. This is one of the biggest mistakes that a small business owner could make. With this being said, there are numerous aspects you are wanting to look for when reading over paperwork concerning a small business loan. These aspects include:
- The interest rate you will be paying for said loan
- The setup of payments and how these are structured, take into consideration the late fees or interest that may accumulate
- Are there prepayment fees if you were to pay off the loan early?
- Look at the factoring fee or APR
You will want to do the math to ensure that you are getting the best deal that is possible for you.
The Response time for Funding
There are several situations in which you may need a small business loan as fast as possible. If this is the case, you are going to want to look at lenders who are known for providing fast responses and even faster delivery of the funds. There are many lenders who provide same day or next day lending. In these cases, this is often going to result in a higher APR, thus you must weigh the option as to whether this is the best route for you or not.
How is your Credit Worthiness Determined
With each lender that you may consider for your small business loan, look to see what their credit worthiness guidelines may be. What most people do not realize is that not all lenders are equal. For example:
- Some lenders may require that you be in business for two years, while others are fine with startups that are not established yet
- Some lenders will require that you show an income that has at least six figures, while others do not put this as a requirement
- Some lenders will give you a loan based off of your revenue, while others give based off of what you need
It is these facts that are going to determine if you are able to get the loan, as well as how much you are going to qualify for. So it is best to shop around and do your research before committing to a certain lender.
The Lenders Customer Service
Customer service should be one of the main aspects as to how you determine which lender to go with for your small business loan. The customer service team that you are working with will be those who you call when you need advice or information. You should do your research thoroughly about the lenders customer service. You should:
- Consider reviews that are written about the lender
- Contact customer service yourself and see how satisfied you are with the way they handle questions
- Ask around to other business owners you may know for their insight into lenders they have used in the past
- Be sure to look at not only how you are treated during one call, but how you are treated for a few different times in which you call. Many business owners tend to go the institution on different days to see if there is a difference in their customer service.
Customer service is important, as you will find that poor customer service can lead to a poor total experience, which is going to make the entire loan process even harder on you.
How much do you need
Once you have a narrowed down list of lenders that could provide you with a small business loan, it is time to figure out just how much funding you are going to need. This is going to allow you to narrow down your list of lenders even more as you will automatically be able to throw out those who do not loan these large amounts that you need.
For small businesses who need loans, it is possible to find these. However, with all the lenders that are out there, you must do your research and find those lenders that are going to fit your needs. And find the lender that is going to lend to you on the terms that you accept.