Whether it’s pizza toppings or car brands, people like to have options. The same could be said for small business financing, which until recently lacked diverse offerings beyond traditional banks.
Although it is growing at a slower pace than some might desire, the economy has stabilized enough to entice banks to go on the record as saying they expect to increase their lending. Add to this peer-to-peer lenders, cash-advance financing firms, and other providers of financing, and it’s clear that small business owners have a variety of options when it comes to securing financing.
To remain competitive, traditional and alternative financing providers are working hard to provide customized options, maintain the integrity of the underwriting process and cultivate a smoother customer experience. Technology has democratized access to capital for small businesses, allowing them to shop, vet and apply for loans online quickly and easily. In turn, these advancements give firms the ability to underwrite, approve and fund businesses in just a few hours.
With so many options, it can be hard to decide which path to take. Small business owners in the market for financing should consider these steps:
- Meet the financiers. Take the time to speak with a representative with at least three different funding firms. You can find out a lot by simply asking a few questions about the programs they offer. If the representative is difficult to reach, or if he or she gives you a hard-sell, it might indicate trouble when working with them down the road.
- Read between the lines. Make sure you understand all the options of the financing agreement and what they mean for your business – and for you if the financing involves a personal guarantee. Make sure you have a clear understanding of what documentation you’ll be responsible to provide, how long the underwriting process will take, and how often you’ll be in communication with your funding contact.
- Ask for references. The funding firm will look into your business’ track record. Why shouldn’t you look into theirs? Look for reviews of their business online. Additionally, ask to speak with one or two of their customers.
For the first time, small business owners are able to take advantage of multiple options when it comes to financing. Make sure that the choice you make is that one that is right for your business in the long term.