For the majority of businesses, access to some extra funding apart from the funds generated by their own can be the golden ticket to ensure that the operations continue smoothly and take advantage of any growth opportunities as they arise.
There are many reasons why a business may need external financing. Cash flow problems are common, particularly in small companies, with 82% of them falling for this very reason.
With high credit sales, slow-paying customers, fluctuating sales revenue along with the need to pay employees, vendors and utility bills on time, many business owners find it challenging to maintain a positive cash flow at all times. At one point or another, the business finds itself in a cash crunch and needs external finance to survive.
Another reason why a business may need external finance is for growth. As the saying goes – the company must spend on resources to grow itself. For example, to expand into a new geographical market, the company may need to open outlets in new locations, which requires money.
Alternatively, if it plans to launch a new product, it will first require investment in R&D to determine the kind of product that will do well in the market and then invest in new machinery, additional staff, bigger premises and marketing for the latest products. No matter what kind of growth strategy the business adopts, chances are it will require some form of financing.
Although external financing can provide the business with financial support in times of need, no business owner is able to take out a business loan without worrying about a million things – which type of credit will be best for the business, how to evaluate different options and how will it affect the company in both the short and long term?
Several things must be taken into consideration when obtaining external finances; one important one is the credibility of the finance provider. Since businesses today no longer rely on bank loans and are more interested in alternative sources such as online lenders, one essential consideration when seeking funds is whether the lender is trustworthy and reliable.
In this article, we discuss ten unbeatable attributes of a top business financier that you need to look for before you decide to seal the deal:
1. Easy application process
The top business financers have a loan application process that is quick and efficient, with little paperwork required. One reason why traditional banks are now considered a less attractive financing option is their tendency to drown business owners in unnecessary paperwork. The application process is also highly bureaucratic, with extended processing time.
Many of the alternative lenders today have a straightforward application process. You apply online in a few easy steps and are in the process within a day or two.
2. Quick funding
A suitable business loan is one which gives the business access to funds as quickly as possible. In the past, when businesses were mainly reliant on banks for loans, it was impossible to get quick funding. Banks took several weeks to provide funds and so if there was an urgent need for funds, the business had no other choice but to wait.
Many online lenders today, such as Fast Capital 360 – Business Loans, proceed with the funding within a few days, once the loan is approved, which makes it a lot easier for a business to deal with any cash shortfalls it may have.
3. Flexibility in lending criteria
The top lenders are flexible in their lending criteria. Unlike traditional banks that can only give a loan to businesses with an excellent credit rating, sufficient collateral and a track record of business success, a great lender considers the business potential and is willing to be flexible in return. Venture capitalists, for example, are eager to lend to small, risky businesses that have a promising business plan.
4. Systematic lending process and proper documentation
The top lenders have a routine screening and lending process, which involves evaluating your business’ credit score and current financial position before they can decide whether to lend you money. If a lender doesn’t perform a credit check and is willing to give you funds too quickly without a formal process, it is essential to question whether they are legitimate. A credible lender will always review your financial position so that they know how risky their investment is.
Additionally, while limited paperwork is often seen as something positive when it comes to obtaining a loan, a credible lender will always ensure all the necessary legal documentation is in place. It is crucial for both parties as it will provide both the lenders and the borrower’s responsibilities regarding the loan are set out in writing to avoid any problems later on.
5. Flexible lending options
Good lenders are flexible in how they lend money. Many businesses today operate in volatile markets where unforeseen factors such as changes in economic conditions, technological advancements, and rising competition make it challenging to predict fund requirements accurately. For such businesses, a fixed-term loan with a fixed repayment schedule is not always suitable.
Instead, a flexible credit facility, such as a line of credit that allows the business to withdraw funds as and when needed, is the solution. Apart from the initial fee, you only need to pay interest when you use the facility, and there’s no charge at other times. It can be highly useful for businesses operating in an unpredictable environment.
6. Transparent terms and conditions
The top business financers are very clear about the terms and conditions of their funding options. Their requirements are precise and in writing, and they will take their time to ensure that you understand them before you sign the agreement. They will tell you the APR (annual percentage rate), payback period, payment schedules and lending limit in advance so that you know the exact amount of funds available to you and the overall cost over the term of the loan, ensuring there’s no ambiguity. If a lender is not willing to sit down and discuss their terms and conditions with you, they may not be the best option.
7. Excellent customer service
What makes a business from good to exceptional, and the answer is outstanding customer service. And this applies to finance providers too. Because you will be working with your lender for months or years to come (depending on the term of the loan), so it is essential to work with the one you can build a positive and mutually beneficial working relationship.
Obtaining finance from an external resource is a stressful process for any business, but the whole process can be a lot smoother when you are working with a lender who is always open for communication and willing to answer any queries or issues you may have. Their staff should be knowledgeable and professional and ready to assist you in every way to ensure the lending process can be as hassle-free as possible.
8. No pressure tactics
A reasonable lender never pressures the borrower into signing a deal with them. They do not offer ‘limited time offers’ or try to rush you in any way during the lending process for their benefit. Reputable lending companies work for the benefit of the borrower – they give you several borrowing options based on your needs and let you take your time making your decision so that you can get the best deal and have no regrets later on.
9. Sound rating/recognition
Before choosing a lender, it is essential to consider whether they have good ratings or credentials to their name. The Better Business Bureau, for example, sets a rating for many businesses, including finance providers. If your chosen lender has an A rating, you can be sure you are working with a reliable company.
You can also check the reputation of a financing business by requesting them for their client’s testimonials as well.
10. History of positive relationships with other customers
Every loan provider uses great branding techniques and tries to portray itself as being the best lender in the market, but the most trustworthy lender is one whose customers have words of praise for it. If the lenders were able to foster positive working relationships with their customers in the past, you are would likely to provide you the same service too.
But before deciding to sign a financing contract, it is crucial to do some research online and read customer feedback about different lenders. You might find both positive and negative reviews, but if the majority of customers have had a positive experience working with a lender, it’s a good sign.
With significant growth in the lending options on the market, your business is sure to find several options. Regardless of the external financing option, you decide to proceed with, and it is essential to take your time looking into your options, evaluating the credibility of each financer and going over the terms of the agreement in detail to ensure you get the best deal. Rushing to make a decision and realizing a few months later that it was a bad one can be very costly for your business. So choose wisely, and your company is sure to benefit from the extra funds.
Shift Frequency © 2019 – Unbeatable Attributes of a
Top Business Financer