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As an entrepreneur, you know that you have to spend money to make money. Whether you’re just starting, trying to expand, or you need a cash infusion to manage some unexpected expenses, getting a business loan is a necessary part of the enterprise process.

While you could try to navigate the borrowing process on your own, it’s always better to go with a commercial loan broker. Business lending has a lot of different options available, so it’s imperative that you work with someone who understands the industry intimately to ensure that you’re getting the best deal.

So, with that in mind, we want to share some choice tips for maximizing the effectiveness of your next business loan.

Understand the Five C’s

When lenders look at your loan application, they are really paying attention to five critical components. The “Five C’s” are:

Capacity – a cash flow analysis to see whether your company is capable of repaying the loan.

Capital – how much money you’re investing into the venture, and whether you have “skin in the game”

Conditions – the state of your industry and company right now, as well as how it will look in the near future

Collateral – assets pledged to secure the loan

Character – the lender’s assessment of the borrower’s trustworthiness, experience, and level of personal commitment to repay the loan

If you try to get business financing without addressing each of these elements, you’re not going to experience as much success as you would otherwise. Overall, doing your homework is one of the best ways to get the financing you need without a lot of hassle.

Meet with Various Lenders if Possible

As a commercial loan broker, our job is to float your application to a broad variety of lending institutions and show you what offers they made. However, a personal touch can make a difference with lending because it’s all about building trust. Just as you should create a relationship with your broker, you should do the same with your lender.

Not only will this relationship help facilitate the borrowing process, but it will allow you to work together to achieve your business goals on an ongoing basis. Realistically, you’ll need another form of financing later on, and it’s easier to keep working with the same lender than to start the process all over again.

Apply for a Loan When You Don’t Need One

This may seem counter-intuitive, but the fact is that the worst time to apply for a business loan is when money is tight. Lenders will be paying attention to your ability to repay (capacity and condition), so if things are lean, it could hurt your chances. Also, it could increase your interest rates!

Thus, you need to be forward-thinking and look ahead at potential financial needs before they occur so that you’re ready when they hit. In short, don’t be reactionary with a business loan; be proactive instead.

Understand the Various Finance Options Available

While we won’t get into too much detail on the kinds of loans and lines of credit you can receive for your business (we do that elsewhere in this blog), it’s imperative that you look at each option and see which one is right for you.

As a commercial loan broker, we can help you with this process so that you make the best decision for your company. In some cases, a line of credit may be ideal, while in others you might want a long term loan. If you don’t know the difference, how can you be sure which one is right?

Contact Us Today

Our job is to facilitate business growth for all of our clients. We will work with you to help you make the right choice for your company so that your loan breeds success, not crippling debt. Call us or go online to find out how we can help you.