As a small business, one of the most important things you can understand are the various options for financing. There are any number of loan types, and many banks that specialize in specific loans. Knowing your loan options is critical for a number of reasons:
1. It will help you determine the best loan for your needs. The fact is there are probably close to thirty different loans types available to small businesses, and these are just the most often used loans, if you start looking at the more obscure loans, this number doubles, triples, etc. The point is that the type of loan you need may not be the type of loan you are thinking. For example, if you want to purchase equipment for your business, a line of credit could work, but so could a loan specific to equipment purchase. Understanding the various loan types will help you find the best loan for your specific funding needs. Again, there may be many loan types that will work, but some may cost you more, or take longer to fund, etc. Understanding your options means leveraging them.
2. It will help you determine the best lender for your needs. The next thing to understand is that lenders do not all offer all the loans. Just like you go to different stores for hardware stuff then you would for fresh fruit, you would visit different lenders for different loan types. Some lenders are like your super store lenders and offer a wide variety, while others specialize. If you do not understand your loan options, it is difficult to know which lender to visit, and which loan types to apply for.
3. It will increase your likelihood of getting the funding you need. When you are familiar with the loan types, you also become more educated about what it takes to get certain loans. You will be able to prepare your loan application better, apply to the right lenders who specialize in your loan types, and in turn, help you get the funding you seek, or at least close to it. In the business world, the ability to get financing is paramount for success.
4. It will help you get the best rates and terms. Again, understanding your loan options means getting the loan that is best for your needs, and that is going to give you the best interest rates, and payback terms.
5. It will result in far fewer headaches and setbacks. The more you know, the easier it is. You will not make the mistake of applying to the wrong places, or applying for the wrong loan types. Instead, you will find the process is much smoother, the chance of getting funding increased, and the hassle and frustration of applying for lending reduced.
Understand the various business loan options available to you. It can’t hurt, can only help, and can be the difference between getting the funding you need and not getting it.
Business Knowledge Source