Ask any business owner: securing funding for your business is, in itself, a full-time job that can be a difficult and frustrating task. While there are many firms out there that claim to want to help you and your business get off the ground or grow, it can be almost impossible to know just who to go with.
This is where a good loan broker comes into play. Instead of you having to find the right people to invest in or lend money to your business, a loan broker takes the pressure off of you by securing the financing for you. Getting your business the best rates and helping to ensure that you partner with the right financial lenders is one part art and another part science. A good loan broker has the ability to straddle both of these frames of reference:
How is what we do a science? Being an effective loan broker is all about being able to evaluate your financials and run the numbers. We examine things like debt ratios to see if you are over-leveraged, we work to understand your cash flow, your expenses and other numbers, and we work to see that there is cash available to repay lenders.
At the same time, being a successful loan broker is also an art. How? The numbers might tell part of the story, but they certainly don’t tell the whole story. Private lending is, in its best case, a relationship between a knowledgeable lender and a thoughtful, organized and motivated business owner. We have to be able to look past the numbers to see how the people behind them tick, and then present that information to the investors we work with. How your proposal is framed to the lender matters.
Our loan brokers have deep relationships in the lending industry. We understand what matters to lenders and how you can elevate your operations, vision and business plan to catch the eye of the right lender.
Businesses seeking funds have a number of options, and one is seeking investors. Investors offer you much-needed funds, but often those funds come with a catch: the investor expects a return on his/her investment for the duration your company is in business, and that investment often comes with the ability to influence or control how funds are used — at least in part. In addition, depending on what sort of agreement has been set up, investors can often increase or decrease their demands and involvement down the line as situations change. Simply put, an investor comes with strings attached.
Another option is to find lenders. Lenders give money, and expect it to be repaid on predetermined terms, but other than that they take a much more hands-off approach. Because of this approach, borrowing from a lender has many benefits:
One major advantage of going with a lender is the idea of set terms. As mentioned above, investors oftentimes have the power to change the terms of the arrangement, depending on how things are going. If business is booming, they might decide to sit back and see. But if there are problems, investors usually have the power to step in and make changes. They own part of the business, after all, so why wouldn’t they?
In addition, should your business boom, investors stand to make a lot more of your money — since they invested, it is understood that repayment options vary depending on your bottom line. The more you make, they more they make. Lenders get back the same amount, no matter how much profit your business does or doesn’t make.
Another advantage to using lenders rather than investors is that you don’t have to worry about lenders trying to be hands-on when it comes to your business and how you run things. It’s your business. Your only obligation to your lenders is to pay back the money on those pre-set terms. They are not able to tell you what to do
No Split Ownership
The reason investors are able to have so much power over your business is that a common aspect of the investment relationship is that in exchange for the capital, the investor gains partial ownership of your business. It is no longer yours alone — they now have a say. Depending on the size of the investment this can be a small say or a large one, but it still can determine the direction and operations of your business.
With a lender, there is no split ownership to worry about; everything remains yours, and your alone.
Future Dealings are Optional
Finally, lenders have the advantage of coming with no future obligations other than repayment. You can choose to maintain the relationship and seek future funds, or you can choose to go with other lenders down the road. Getting investors means starting a long-term relationship; unless they sell their stake down the road, you’re stuck with them for good or bad, regardless.
You Need a Guide
Finding the right lender for your business can be a difficult proposition; this is where we come in. Let our loan brokers help you on your path to funds by researching and finding the perfect investors for you and your business.
If you would like to know more about what we can do for you, call us to start a conversation about your business goals.