Tips for a Small-Business Loan
- by Luke Jansen
You may have launched a small company and know that there are many opportunities for financing. You can be skeptical. Rob Stephens CPA, founder and CEO of financial planning business CFO Perspective, states, “Don’t just trust the lender’s website.” “Companies that fail are continually popping up.” You want a lender that will provide excellent service throughout the term of your loan. We talked with finance experts about how you can find the most intelligent loan for your company.
Start with SBA. The Small Business Administration’s website is worth a look. The government loan offers lower interest rates and longer payment terms. But, getting one can prove slow and complicated, according to Keith Chulumovich. He is also the managing director of O’Keefe’s financial advisory company. “Many of these programs take longer than banks,” says he. “Qualification requirements are often too difficult and time-consuming, which can make it more burdensome.”
Referring to others is a good idea. At least three loan options are recommended from different sources. First, Chulumovich suggests that you speak with an attorney or accountant. They’ve seen thousands, some of them excellent, others disastrous, and can refer you to trusted lenders, sources that grant, or community credit programs.
Do your research regarding internet lenders. Many companies on the Internet claim to be registered loan agents or lending platforms. Scissons recommends being on the alert for fraudulent lenders and fraudsters claiming they are legitimate lenders. Google “[name] lenders reviews” will bring up experiences from others on sites such Reddit. In addition, most states have websites that will confirm that the company is legally incorporated in the U.S.
Compare your loan options. Scissons states, “A common error is to focus only on the rate of interest.” She offers six factors to consider: how much money is provided, the additional fees, term length, collateral, reporting restrictions, and any special rules for paying off debt. She said that every loan is different in terms of repayment terms. “Can you pay the loan off earlier than expected? Are you paying interest and principal or a large principal payment at the conclusion? Create a little chart to show all your options and rate each one from 1 to 5.
Take a look at the effects on your business. Before you agree to take out a loan, be sure to examine the monthly impact on your operations and bank account. Kirsha CPA, president and founder of The Cash Lab accounting firm, says: “Access its effect on your business.” This includes liquidity, solvency, cash flow, and logistics of paying off the loan each month. You might find that, for instance, one lending platform is not connected with your bank’s API or that your quarterly payment timing is better suited to your cash flow.
It would help if you considered a lender offering many business services. A good relationship with a business banker is essential. A long-term relationship with a business banker can allow you to access a range of financial services and other benefits. In many cases, you will get the best rates. Sometimes you can even reduce the wait time for a loan by as much as two weeks. Stephens says, “You need someone who is patient enough and will work with your company through difficult times.” “Find someone with whom you can build a business relationship.”
You may have launched a small company and know that there are many opportunities for financing. You can be skeptical. Rob Stephens CPA, founder and CEO of financial planning business CFO Perspective, states, “Don’t just trust the lender’s website.” “Companies that fail are continually popping up.” You want a lender that will provide excellent service…
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