Tips For Properly Rating Small Business Lenders versus Online Lending
With so many lenders now offering small business financing, how do you pick the right lender? How do you rate small business loans? Small business loan products vary according to what type of lender is offering the loan. For example big banks tend to have decent APRs, while online lenders might charge more or less, depending on the lender, term length and other factors. Yet ranking a small business loan product involves much more than rating them according to APR and terms. So how do I rank the various small business loan products on the market today? Here is how I rate these products to determine a small business loan products overall value and usefulness.
You need to establish business with a lender who offers high value loan amounts if you are in business and find yourself occasionally needing business loans. Even if your business needs today are small dollar loans of under $150,000, someday you very likely will expand, and with any business expansion and growth, comes the need for financing. Having an existing business relationship with a lender where you have a flawless payment history can go a long way towards fast tracking future loans.
You want to establish a business relationship with a lender that offers a variety of loan terms, from short term to long term, as any businesses needs change over time. You want the flexibility of either short term or long term funding, at least going as high as 4 to 5 years for working capital small business loans.
You do not want to do business with a lender whose APRs are no where near competitive in most cases, unless your business has taken some credit hits and you have no other choice. Obtaining the lowest possible APR should be a priority when it comes to any small business loan product. Of course APRs will vary by loan type, short term cash flow loans for example tend to carry a higher APR than longer term loans. If the APR matters to you, loan type as well as the loan provider should be a factor in your ranking system.
Turn around time and application process
If your business needs cash, nothing is worse then finding an ideal lender, only to find out that their loan turn around time is slow. You should ask or pay attention to reviews about a lenders turn around time and match that with your current business needs to determine if this lender is an ideal lender for your needs or not.
Transparency about eligibility requirements
It serves no purpose to fill out a loan application only to find out later in the process that you and your small business never qualified for the loan in the first place. Lenders who are clear about their lending criteria are not only helpful towards small business owners looking for a cash infusion, but also more likely to be an honest lender.
Easy to navigate and transparent website
You want to find any information about the lenders lending practices and loan information quickly. Your time is valuable, and you need to know what fees you are going to be facing, as well as the true cost of any potential loans you may take out with that particular lender.