Finding the right business loan is one of the biggest hurdles for any aspiring business owner or entrepreneur. It’s even difficult for established business owners looking for more working capital.
The problem is that there are several different kinds of loans, as well as endless options for loan providers. How are you supposed to choose in such a wide field?
It helps to have some inside knowledge. That’s what we’re here for. Keep reading for a complete guide on picking a loan provider.
Consider What Type of Loan You Want
First, figure out what type of loan you need based on your circumstances. For example, if you’re a brand new business owner looking for startup funding, you’ll probably need a sizeable loan to get your company off the ground.
In this case, picking a loan provider is relatively straightforward. However, you can also apply for a revolving line of credit.
This is like taking out a loan with a maximum value from which you can pull funds as needed. With a revolving line of credit, you can put money into it and take money out at your leisure.
Look for Industry-Specific Loan Providers
In some cases, there are industry-specific options for loan providers. These types of lenders cater specifically to companies that fall within that industry. This can make it easier to qualify and get approved for better loan terms and conditions.
For example, if you’re in the construction industry, check out these construction loans for builders.
Compare Interest Rates and Terms
Before picking a loan provider, spend some time comparing the interest rates and loan terms to determine which lender is going to offer you the best deal. The average business loan interest rate falls between 3.19 and 6.78.
While this may not seem like a major gap, you might be surprised. For example, if you take out a business loan of $100,000 over 10 years at 3.19% interest, your total cost will be $116,928.31. If you took out the same loan at 6.78% interest, your total cost increases to $137,973.37.
When you look at things from this perspective, comparing loan costs becomes incredibly important.
Learn About the Lender’s Reputation
The next step in picking a loan provider is reading online reviews. You need to find out more about the lender’s reputation among other business owners. Go online to research each lender you’re considering working with.
Look at their website or use Google to find customer reviews and testimonials. What do their other borrowers think about the lender in question? Do you see any recurring complaints or negative comments?
Find Out More About Their Customer Service
Finally, spend some time talking to potential loan providers to get a better feeling for their customer service skills. You should only take out a business loan through a lender that possesses high-level communication skills and convenient business loan application processes.
If there’s a problem with your loan or your payments, it’s important that your lender is there to support you. If you’re stuck on hold for hours on end waiting for customer service, this is a problem.
Are You Having Trouble Picking a Loan Provider?
Picking a loan provider is essential to the success of your business. How much money you can get approved for and the interest rates you qualify for will have a long-term impact on your business. Follow our guide to select the best lender for your needs.
And if you’re looking for more small business advice, look no further. Our blog was created to help entrepreneurs like you learn more about finding success.
