Selecting the Right Lender for Your Business
The financing options available to smaller businesses have been steadily increasing. The small and lower middle market lending arena is now busier than ever, with a wide spread of lenders keen to promote their individual products. One common mistake is to accept the first lender that offers its help, and another is to focus solely on a lender's interest rate. Below are four key criteria smaller businesses may wish to consider in seeking intelligent liquidity for their business.
1. Variety of Funding Options
Small businesses usually have very individual needs. Some lenders try to fit small-business customers into one of their traditional business loan products. By contrast, other more innovative lenders are increasingly offering a wide array of financing choices, and are able to tailor their products to meet the individual needs of their customers.
In securing appropriate financing, it's important not only to consider your company's immediate needs, but also its future needs. Some lenders will tie a company into an inappropriate financing structure that later hampers that company's growth. The right lender for your smaller business will look ahead and provide financing with sufficient flexibility to support your evolving needs.
3. Partnership and Dependability
In seeking a lender, it's helpful to regard the relationship as a long-term strategic partnership. The best partners are those who understand your business model well, are dependable, and can offer various loan structures to accommodate changing circumstances--including any financial bumps on the way to profitability or growth.
4. Short Cycle Time
In today's fast-paced environment, cycle time is critical. This is the time it takes for a lender to complete a financing transaction, from the initial request, to negotiating the terms, to securing necessary documentation, to the closing and funding. A responsive, experienced lender can compress this cycle time and deliver funds more quickly, allowing a company to take advantage of time-sensitive opportunities.
Finding the Right Lender for Your Business
All too often, what small businesses require is a mix of financing, intelligently structured to meet their specific requirements. Look for a lender that originates, structures, and manages loans, and is able to "engineer" the most appropriate mix of financing for you quickly and efficiently. Often, a good lender is able to increase availability through the discovery of credit enhancers and ways to mitigate credit risks, ensuring you get optimal and custom financing for your business.###
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