According to Bloomberg News, the moment a new company is launched, the inboxes swell up with financing proposals galore. Would-be lenders advertise their products on rbanne ads and e-mails just overflow. Every new business owner becomes skeptical, and this is a natural phenomenon. However, while many new lenders will have websites claiming services that sound too good to be true, few may not have at all. Mostly there are fly-by-night lenders that do not last. Working with a lender that will offer services that last throughout the tenure of the loan is what is needed.
Tips to find the right lender
Bloomberg News points out the following ways that can help new business entities lay their hands on the much-needed funds for their businesses to thrive.
1. Turning to SBA
The website of the Small Business Administration is the first step towards getting access to the loan. One advantage of government loans is that they attract a lower rate of interest and payment terms can be extended as well. However, taking out one such loan can be a cumbersome affair and may be time-consuming.
2. Referrals work
While getting referrals, getting at least three or more options helps. Talking to lawyers and consultants helps because they have a huge network of people belonging to different walks of life. They will also know about well-known and reputed lenders operating in the domain.
3. Doing your homework on lenders
The web is full of lenders that try to lure debtors with their not-real enticing offers. They call themselves registered loan lenders and reputed lending platforms operating in the marketplace. However, the majority of such firms claiming to be the best are bait for much serious form of hoodwinking and are middlemen. Some of them may be fraudulent lenders, others work on behalf of the fraudsters. Looking up Enforcement Actions search Tool at the US Office of the Comptroller of Currency. Checking with the Better Business Bureau will throw light on whether there is any litigation against the lender/s.
Most of the states have company websites of the lenders where one can find out whether the company is legally set up. Bloomberg News also says that comparing loan options helps go a long way.
4. Comparing loan options
A common mistake that most debtors make is to focus solely on the interest rate. However, experts say that few other factors must be considered before settling for the loan. These factors include funds the lender is offering, additional fees, length of the loan term, collateral being used or whether it is required, special norms governing the loan, and reporting limitations.
5. Assess what effect the loan will have on business
Before taking the plunge, Bloomberg News states that it is important to understand how the loan will impact the business operations every month aside from other financial obligations of the newly set up company. Solvency, liquidity, cash flow, and logistics are a few of the aspects that require attention. Most importantly, it is necessary to find out whether the banking platform will be compatible with the lenders’ way of operating.
6. Try to work with a lender offering multiple services
A lender that offers multiple services opens many avenues. It includes a wide range of financial products, better rates, and reduces the time for disbursing the loan. A lender that will be by the side of the clients is the best lender to work with. Building a genuine relationship with the creditor is crucial.
