When it comes to financing your business, it takes a village. Or at the very least, it takes the right commercial lending partner.
With an increasing number of options available, it’s important for every business owner to fully understand what the lending process entails and how they can choose the right partner.
What You Need to Bring to the Table
No matter what lending partner you end up choosing, there are still a number of baseline requirements you’ll need to meet on your end as a borrower.
These usually include preparing documents showing your company’s basic financial information, recorded profits, and any accrued debts.
You may also be asked to provide personal financial information like credit scores as well as resumes or a personal statement about you and your business.
Know What You Need
After gathering all your personal information, you may discover that you actually need to wait to apply for a commercial loan because your credit score isn’t up to par.
Likewise, you may realize that you don’t know exactly how much money your business needs.
In order to find the right commercial lending partner, you need to get down to the nitty gritty and map out exactly what needs funding and how much money is needed to cover those costs.
Do you need real estate for a brick and mortar location? Do you need an expensive piece of machinery to automate your processes and make your business more profitable? Or are you simply having an issue with cash flow at this stage in your company’s development?
As the article “How to Choose the Right Commercial Lending Partner” notes, knowing this information will help you narrow down the specific loans and lending partners you should apply to.
Weigh Out Pros and Cons of Lender Options
Lending options can include banks, private investors and institutions, or even the involvement of the government. Each of these has its own pros and cons to consider.
If you have solid credit, an established business, and need funds fast, banks are a viable option.
Business owners should keep in mind though that the repayment periods on these commercial loans may be shorter than with other options.
If your business qualifies, there’s also the chance to apply for an SBA loan.
These will usually require more paperwork and take longer to process but have the benefits of a longer repayment period and offer lenders more security.
If you don’t qualifying for any bank or SBA loan programs, you may seek other private options. This is where business owners need to be careful and do their homework.
Research the lending partners you’re considering by not only looking them up in the Better Business Bureau, but search for reviews or lending experiences online and in person from fellow business owners.
Doing this detective work now can save countless hours; headaches, and dollars later.
Launching and continuing to fund a business can be one of the most stressful parts of entrepreneurship.
Fortunately, following these clear steps can better your chances of not only getting a commercial loan, but finding the right partner for the ongoing life of your business.
About the Author: Kristin Livingstone writes on a variety of topics including small business and commercial lending.