5 Factors to Consider When Choosing Business Loan Providers

Hundreds of thousands of small businesses open every year. Sadly, hundreds of thousands of small businesses close every year as well. One of the main reasons so many businesses close is a lack of funding.

While some of this goes to poor financial management or a bootstrapped business looking to avoid debt, some of it stems from picking the wrong business loan providers. The right loan provider will help steer you toward the right types of loans. The wrong provider will steer all business owners toward the same loans.

If you’re looking for the right small business loans, keep reading for five factors you should consider when picking a loan provider.

1. Loan Variety

A good business loan provider will off a number of loan options that serve a wide variety of business owners. Watch out for providers who only offer loans in sizes that exceed your needs.

While they offer excellent options for certain kinds of larger-scale businesses, these providers don’t serve your type of business.

2. Look at Their Reviews

Before you get too deep into the process, take a hard look at the kind of references and reviews the lender gets from other customers. While you shouldn’t lose any sleep over a few bad reviews, you should pay attention if you see a pattern of complaints.

For example, some lenders treat small borrowers as an afterthought. They return calls or address problems when they get around to it, rather than making those customers a priority.

3. Fees

You should also spend some time comparing lender fees. One provider’s fees might look good on the surface but actually cost you more in the long run. A few of the common fees include:

• Origination fees
• Underwriting fees
• Closing costs

Also, watch out for incidental charges. Look for or ask for a fee schedule and breakdown of charges.

4. Repayment

Paying off loans is just as important as getting small business loans in the first place. A loan only helps you if it’s within your ability to make the necessary payments each month. Before you accept the loan, make sure your current cash flow can support the payments.

5. Other Requirements

Make sure you take a close look at the borrowing requirements. Some banks will require that you maintain a variety of insurance policies on the business or property, such as a commercial or hazard insurance policy through a company like Erie Mutual Insurance. These policies protect the loan by ensuring that business won’t go under due to a robbery, civil suit, or natural disaster.

Business Loan Providers and You

Don’t just go with the first provider your run across. There are many business loan providers that cater to different kinds of businesses.

Look for a provider that offers loans appropriate for your business. Check out their reviews, fee schedules, and borrowing requirements to make sure you get a good fit. Always make sure you can afford the payments before accepting the loan.

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