News Americas, NEW YORK, NY, Mon. Nov. 25, 2019: Ready to apply for a business loan? Check out these pitfalls you need to avoid when making your applications.
If a company has made the informed decision to go ahead and take out a business loan for whatever reason they deem fit, it is crucial that they do not rush into taking the funds from the first supplier that comes their way. There are hundreds of different companies that are more than happy to give money away with what appears to be little concern, and all have different rates, fees and credibility that should be explored in depth before signing on the dotted line. Many people will just google business loans and take the one that appears as the cheapest rate however this could end up being a mistake and not actually work out as the cheapest in the long run.
Loyalty with Bank
Some people will automatically default to their own bank for the business loan as they have a relationship with them and feel a level of loyalty. Indeed, it is probably easier a maybe even quicker to get a loan this way as the bank fully comprehends your financial history, but the banks know this and therefore may not offer the best rates. It is best to get a quotation from your bank that you are not tied into and thereafter get rates from other sources.
Applying at Multiple Sources
There are many reasons to get a business loan and, as long as they do not see you as a larger risk, the lenders are more than likely to make an offer to you. When you are browsing the different lenders, it is important to understand if they are doing a “credit search” on you when you are asking for a quote. This is important as if you apply for the loan in many different locations, this will directly and negatively affect your credit score as it looks like you are looking to get multiple loans from people even when that isn’t the case.
In this instance, it is best in advance to check your own credit rating (or your company’s) so that you understand the likelihood of getting a loan. Maybe use a loan calculator tool with a lender’s rates function but don’t actually apply until you are pretty sure that you are going to follow through with the lending from the company if accepted.
The interest rate is the thing that people searching for a loan normally look at instantly. Clearly, this is important as it determines what you will be paying back in interest. Other things could affect your payments which include any initial set-up fees from the company. Some even have some pretty heavy early repayment penalties that can add a lot of cash onto your contract in the event you want to clear your loan off. As a result, do not automatically jump to the company with the lowest interest rates as they probably won’t have the best overall deal.
Avoid these pitfalls now in the hunt for your perfect business loan. You won’t regret the extra time spent searching if it means you can avoid a hefty fine or something else which could impact your business.