How to Choose the Right Commercial Lender and the Right Commercial Loan by gyvwpsjkko


									?It is often tempting to jump into the first opportunity for a commercial loan that you
may come across. While your tendency may be to focus on how additional funds may
support or expand your business or commercial real estate portfolio, you have to take
the time to make two important considerations - choosing the right commercial lender
as well as the right loan for your business. You should evaluate potential lenders as
well as their commercial financing options to see which are best suited for your needs.

Is the lender trustworthy?

You need a lender who will act as a partner for your business. There are reliable and
respectable lenders who are willing to guide you through the difficulties of acquiring
the right financing package. On the other hand, there are less-than-reputable lenders
who prey on and take advantage of companies in need of quick funding. While the top
lenders have solid reputations, you should check for references for smaller lenders.

Do the lender references check out?

Ask the lender to give you five to five references, so you can evaluate their experience
and background. If permitted, contact the references for feedback to see if they are
satisfied with the lender.

Does the lender offer a wide range of financing options? Is financing accessible?

Check if the lender offers a range of financing options / loan packages that serve your
present as well as your future needs. You may need a simple loan arrangement now,
but can the lender support the future needs of your business? Accessibility in
acquiring the funds right when your business needs them is important.

How well does the lender know your industry?

Lenders who know your industry will generally know the needs, capabilities and
potential of your business, and they are in a better position to give you a suitable loan
package. They can also see the total picture and recognize temporary limitations
against your business' potential.

Choosing The Right Loan

Once you have narrowed down your list of potential lenders, you can evaluate their
financing options to determine which is most suitable for your business and for your

Term Loans

These are the most common loan types that are used for general purposes such as
working capital, expansions, purchases and acquisitions. Term loans are used to
support your straightforward needs for additional funds, which are to be used for clear
and specific purposes. These loans will allow you to acquire large sums over long
periods which are to be paid monthly or as in the case of short-term loans, smaller
amounts that are paid in full at the end of the term.

Credit Lines

These types of loans are more flexible as they allow you to draw additional funds
whenever the need for additional cash arises. Interest rates for credit lines are based
on the outstanding loan balance. Different lenders offer many variations of credit line
type loans - you must evaluate each credit line carefully and determine which will fit
your needs without being too costly.


Another not so common option for smaller companies is factoring or receivables
financing. Factoring allows you to "sell" your invoices so that you can have the funds
immediately. If your business has active but slow paying accounts, factoring may be
very useful.

Meeting your needs

If you have taken necessary measures and the time to properly evaluate potential
lenders and their loan packages, you will be able to choose the right commercial
lender and the right commercial loan to meet not only your current needs, but the
future needs of your business.

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