This is obviously a good strategy if you can qualify for lower interest rates as its going to save you and your business money.
But what they fail to take into account when making these sorts of inquiries is the potential work involved and the time it could take to accomplish this objective.
First of all, the providers of cheaper money automatically fall into the category of lower risk lender, which means that they are going to take their time making lending decisions, that they will have considerable lending/funding requirements to meet, and that they will perform or require considerable due diligence on each and every deal that they consider.
So assuming that you or your business could qualify for cheaper money, its going to take time to get it into place.
If you have a timeline to hit in the future where an interest term on existing debt is coming due or you will have a commitment that will require incremental capital, you would be well advised to start the financing process at least 90 days ahead of time.
Once again, this is assuming that you would qualify for this type of financing.
So before investing time and money into a lender’s application process, the first units of time should be spent finding out what you can qualify for.
This can be done on your own or through the help of a business financing specialist.
This assessment process requires a review of your financial and credit profile which can then be applied to the basic lending and funding criteria of individual lenders or groups of lenders.
For instance, while not exactly the same, most “A” lenders will have very similar lending/funding criteria. And while understanding whether or not you fit a lenders criteria is going to be important to determine if and when you should apply for cheaper money, equally important is knowing what lender or lenders are also interested in the type of application you are putting forward.
Commercial lenders are continually “in and out” of the market all the time for certain assets, applications, industries, and geographies, or some combination of these as they work to maintain a balanced risk portfolio. So even if you can determine that you can meet a certain lender’s funding criteria there is no guarantee that they will be able to grant you funding at any particular point in time.
After performing the initial assessment, you may discover that you do not qualify for the type of financing your after. At that point, the financing exercise is about investing time to get your business in a finance-able position by addressing the areas that would cause you do be declined by lower cost lenders.
All of this takes time, and in many cases more time than you can imagine.
But being able to secure lower cost money can also be a considerable saving to you and well worth the effort.
If you’d like to find out more about your available commercial financing options, I suggest that you give me a call and we’ll go over your situation and requirements together.