When anyone looks for financing of any type, they are intuitively looking for the best deal with the best rates, the best terms, the best fit for what their doing.
And many business owners will start out with their own set of criteria of what they are looking for in terms of amount of money and what the related terms and conditions need to be.
The challenge is then how fast their perception of what’s available to them can be lined up to the reality of the capital markets at any given point in time.
Let me explain.
At any given time, a business may be eligible for certain types of financing rates and terms, but what lending source can provide it?
When the overall market is operating during a period of sustained economic growth, more lenders will be providing similar terms on similar deals most of the time.
When the market is operating during a period of uncertainty like the current recession, the same financing opportunities can still exist for a given business, but its likely that there are fewer lenders that will provide the best potential deal at any given point in time.
The reason is that economic uncertainty increases risk and losses for debt lenders just like any other business. And to protect themselves, some debt providers will leave the market all together for certain types of deals for a period of time, some will cut back, some will expand their criteria for approval, and so on.
The result of all this is that the ultimate best commercial financing deal can be very hard to find in times of greater economic uncertainty.
And when most financing requirements have some sort of time line that needs to be met, the best deal can very well be the one that can be approved and arranged in the time required.
This doesn’t mean what you can get a hold of is the best potential deal in all respects. It just means that its a source of money you can make work in the time you have.
Searching for a better deal is always an option, but there are two things to consider with looking elsewhere. First, you may run out of time and either miss out on the opportunity you’re looking at, or incur additional costs from the delay. Second, if you are unsuccessful finding something better, there is no guarantee the first deal is still going to be available to you later, especially in strained economic times where lenders are known to change their minds or lending direction quickly.
Its a bit like the old “bird in the hand is worth two in the bush” saying. Sometimes a deal that’s close enough to your requirements needs to be good enough, at least for the short term until more predictable options are available.