With the highly active financing services industry, the number of potential lenders and financing companies keeps on growing. Unfortunately, picking the right one is becoming increasingly difficult, especially in light of an increasing number of scams which we are seeing.
Investors who are establishing small or medium scale businesses often have a common problem: the raising of initial capital. The most common solution here is to look for external financing sources, usually private lenders and financing companies.
Choosing the right lender
An investor should do their best to locate the perfect lending or financing company, which provides the best combination of low interest, flexible terms, and other benefits that come with a financing deal.
Following these tips should help the newbie investor get on the right path:
Create a shortlist by choosing well-established entities in the industry
To simplify things, one should pick lenders and financing companies who have solid experience in the industry. Experience usually equates to company stability. Stable companies are less likely to scam their clients because they have reputations to keep. Those who have already achieved a good level of stability would also have probably built a great network of contacts which you may use to your advantage in the future.
Compare offers before getting into a deal
This is like shopping for a specific product in a big department store. It’s essential that you closely examine financing products, interest rates, lengths of payment, terms of service, and even insurance.
While the comparison process can eat up a lot of time, it ensures that only the most advantageous deals are signed. Most companies will give quotes for specific loan requests, which can be used to determine the best deals. Getting many of these quotes and offers is integral if you want to find the best deal.
Examine the track record of each company or private lender
While the length and breadth of the lender’s experience is clearly important, you should look even closer into the history of the possible lenders to determine the way that each company operated throughout its existence. Try to find out how many successful businesses such lenders were able to serve in the past. How many of these clients chose to stick with the lender for long periods of time? Are there any rave reviews that the company received? These things will matter when one really wants a lender or financer that could act as a partner for the business.
Look at the quality of customer service
The lender should have people/staff that are friendly or easy to approach. The way that they treat clients will be a very important factor most especially when there are always possibilities for problems to arise in the future.
You’ll be working often with your lender, so it’s a good idea to choose lenders who can provide more than one way of communication with clients. Aside from a website, the company should have a physical office that can be visited by clients in need of assistance.
The choices that you make regarding financing early in the life of your new business will have a lasting impact on its success. You can’t do too much research in this area: your future may depend on it!