It’s like having a baby: You plan, wait, fret, mull and flesh out every detail associated with your new business after what’s likely a long period of research and conversation with business people in a position to advise you on chances your new venture will succeed. Now, you’ve enjoyed some success but need more cash to expand, diversify and grow–but where to go for help? Central to your efforts to find a resource is your need to choose the best type of small business loan you can negotiate. You may have more options than you imagine once you begin your search for the best small business loan resource for your unique situation.
Size matters. With everything on the line—your future, reputation and assets—why choose a small, little-known lender to underwrite your business loan? It’s easy to fall into this trap—picking a lender because your family has done business with the institution for generations or because your friends recommend a resource looking to expand its’ presence in the community. You need power. Strength. Reputation. According to Inc., small banks may be easier lending targets, but small and midsize banks only “control only 22 percent of all bank assets, account[ing] for 54 percent of small business lending.” For this reason alone, consider size when auditioning candidates to underwrite your small business loan.
The right credit type. Some small business lenders prefer to set up an entrepreneur with a line of credit or a credit card rather than handing over a lump sum in the form of a loan so the new business owner can control his own spending schedule, but credit cards can have dicey interest rates associated with their use and while a line of credit can sit untouched for some time before being tapped, they may still be constrained by time since that money must be reimbursed within a set number of years. For these reasons, a straightforward small business loan still makes the most sense for numerous reasons, though the right line of credit could also be your best bet in some instances.
Secured or unsecured, that is the question. Not every small business owner is willing to put the family ranch on the line to secure a loan—some don’t have a ranch to use as collateral for a loan anyway, so your decision to pursue a secured or unsecured loan rests on this reality. Secured loans are the easier of the two to obtain, but that doesn’t mean you’ll automatically get a resounding “yes” to your application just because you’ve got assets to secure funds. If your credit rating is lackluster—or if your business plan won’t stand up to scrutiny even if your previous track record is excellent—your search for funding could be delayed.
The right credentials. Assuming you’ve amassed enough ammunition to apply for a small business loan and identified a couple of potential lenders that are likely to say yes to your application, you’ll still give yourself and your future a boost of security if you check out a lender’s pedigree. Look for credentials and certifications that show a lender to be at the top of its game because it is associated with or backed by big name organizations, associations and agencies like the Small Business Association, Better Business Bureau, International Factoring Association and other credible resources.
An innovative small business loan experience. It’s no secret that banks and lending institutions can be hamstrung by boards, changing economic conditions and size, which is why savvy entrepreneurs are getting creative when seeking capitalization to expand, diversify and grow. Typical of such a model is Advanced Funds Network (AFN), a boutique resource that has already loaned $10,000,000 for business expansion. With A+ Better Business Bureau and International Factoring Association ratings–and enough satisfied customers to convince anyone of the company’s merits–AFN offers business lines of credit, cash advances and loans quickly because the firm works on a unique assessment model larger institutions can’t afford to use. Check out the firm’s website and prepare to be impressed by the logos of companies AFN has helped and then find out if this resource can help you, too.