“Business Financing Or Commercial Financing Aligns
With A Bird In The Hand Philosophy”
One thing that business owners and managers have a hard time understanding is that business financing or commercial financing is not typically very pliable or flexible or even predictable and getting funding arranged that is within your strike zone or acceptable to you is or should be the primary goal versus trying to get the best deal.
Sure, we’re all interested in the best deal, but to be considered for such, there are a few things you’re going to need.
First and foremost, you are going to need time. Especially when you’re going after the lower cost funds out there, remember that lower rates relate to lower risk which takes more time to assess, approve, and fund.
Second, you’re going to need a highly competitive financing scenario where several lenders would be eager to fund the deal so that you have leverage to command lower rates.
Third, you will need to be able to meet all the requirements that “the best deal” out there is going to throw at you before any funds are going to be advanced.
This type of perfect scenario where the borrower has a considerable amount of leverage is few and far between in the world of business finance.
The rest of the time, the lender has the upper hand and will dictate the process, requirements, costs, and so on, leaving very little bargaining power for the applicant.
Lenders tend to be in a stronger position because businesses typically are in a rush and don’t have the time necessary to carve out a position of strength in the financing process.
But despite their apparent disadvantage when negotiating business financing arrangements, business owners and managers will still push their luck to try and get the best deal without sufficient time or resources to pull it off. This can happen as anything is possible…its just not likely most of the time.
This is where the bird in the hand comes in.
Because of the inflexibility and unpredictability of business lenders, when you have one of them interested and lined up to provide you with the capital required, you have to seriously look at accepting their offer, even if you believe there may be a slightly better deal out there.
While a better deal may exist, are you going to find it and wrestle it to the ground in time to take advantage of it? And how long are you going to have to delay making money while the search for the better deal marches on?
And if you can’t find a better deal and return to the original offer, there is no guarantee it will still be on the table.
Lining up business capital is almost always a challenge and getting optimal rates and terms even more so.
Once you have something lined up that can meet you needs and is acceptable to you, even if not preferred or ideal, you are likely better off in many cases to take the money and get making money versus the risk of going back into the market looking for a better deal.
Over time, this approach allows the business to take advantage of opportunities on a timely basis.
If the optimal financing approach is taken, there will likely be as many miss steps as successes over time, which is not likely to get you any further ahead, but will be much more frustrating to deal with when things aren’t coming together they way you expect or require.