Starting or running a small business can sometimes require more resources than you possess. Whether you are in need of funds to purchase new equipment, hire more staff, or expand your physical space, small business loans can provide you with the financial boost your business needs to thrive. However, taking out a loan is not something you should rush into without careful consideration. In fact, choosing the right lender is one of the most crucial decisions you will make in the loan process. To help you make the right choice, here are some factors to consider when choosing a small business lender.
Loan Requirements – Before you apply for a small business loan, it is important to know the lender’s requirements. Find out what the credit score, annual revenue, and time in business requirements are. Understanding the minimum eligibility requirements will help you determine if you qualify for a loan from that lender.
Interest Rates & Fees – The interest rate and fees are some of the most important factors to consider when choosing a lender. Compare the interest rates and fees of different lenders to find the best deal. Remember, lower interest rates and fees will help you save money and reduce your total loan cost.
Loan Terms – The loan terms refer to the length of time you have to repay the loan. Longer terms usually mean lower monthly payments, but higher total loan costs. Shorter terms often come with higher monthly payments, but lower total loan costs. Make sure you understand the loan term, repayment schedule, and any penalties for early repayment.
Customer Service – The loan application process can be stressful, and you may have questions or concerns. Check the lender’s customer service reputation to ensure that they are responsive and knowledgeable. You want a lender who is easy to reach, responsive to your inquiries, and willing to work with you to find solutions that best suit your needs.
Reputation – Finally, research the lender’s reputation. Look up reviews online, ask for referrals from other business owners, and check the lender’s track record. You want to work with a lender who has a reputation for being a reliable lender that treats their customers well.