Loan Amount
Figure out exactly how much money you’ll need to borrow from your prospective lender. Furthermore, determine if the loan is a one-time necessity or a regular thing. Some lenders may be more suited for ongoing financing as opposed to a one-time loan. Ideally, you’ll want to open and manage all your business loans with a single lender. Getting your funding from different sources means managing more paperwork and dealing with different organizations and their policies.
Quick Capital Versus Long-Term Partner
According to Sean Seshadri, you should look at potential lenders not merely as a temporary source of capital, but as a long-term resource for your enterprise. Work with a lender who truly understands your needs and objectives and is invested in helping you grow over time. Don’t just look for someone who is trying to sell you on their financial products and do not care about your business’s success. A solid track record and relationship with your lender can yield better interest rates, financing options, and terms and conditions.
Application Process
Any good lender will have a straightforward loan application process that helps speed things up. How much documentation are you required to provide? How long does the bank usually take to give you a response regarding your application? Can you apply for a business loan online? Nowadays, it’s common for banks to offer the option to apply for loans online. It speeds up the process and lets you avoid the hassles of “red tape”.
Clear, Written Proposal
The best business loan lenders will draft a written proposal that goes over all terms and conditions, rates, and any applicable fees. In response to your application, a lender will typically respond with a clear, written proposal within a week.
Loan Limitations
Generally, you’d want your loan do not have any restrictions in terms of how you can use it. However, in some cases, a lender may restrict the use of capital, depending on the borrower’s creditworthiness and circumstances. As long as its purpose is business-related, you should have complete authority over how you use the money.
Approval Rate
The approval rate for your loan varies depending on where you are applying. Traditional banks usually have lower approval rates and more stringent loan requirements as opposed to online-based lenders. Look for a lender with a high approval rate. Avoid going to lenders who are notoriously strict with their loan applications as this can negatively impact your credit score, which makes it even more difficult to find fair loan rates.
Final Thoughts
Looking for the right business loan lender, according to Sean Seshadri, is one of the most commonly neglected tasks of aspiring entrepreneurs. As a result, they become inundated with unnecessary fees, unreasonable terms, and financially debilitating interest rates.