When Trying To Land A Business Loan, How Picky About Your Terms Should You Be?

When opportunity comes knocking on your business door, you want to answer as quickly as possible and try to take advantage of it, right?

I mean, you’ve done your diligence and have decided that you have an opportunity to go after.  There’s just one problem…you need a business loan or some other form of business financing to make it happen.

No problem.  You just go down to your bank and get a business loan, right?

That may very well be how it goes down.  But before you even go ask, here are a few things to keep in mind.

The process of securing money is 9 times out of 10 time consuming, even when you go through well established relationships.   And any inquiry to a new lender will likely take longer than to an existing lender, all things being equal.

Plus, the nature of business financing decision related to business loans can be influenced by the lenders portfolio at a given point of time, their policies, staffing, the weather, and who knows what else.

The point here is that its hardly ever easy and fast to get your hands on business financing of any type.  Yes, it happens, but its not what you can expect on average.

So time is money when you’re trying to take advantage of an opportunity that may very well have a shelf life.

The second point to remember is that the first business loan terms you secure might not be the best that you could secure at a given point in time.  This really can be a profit killing brain buster.

Many times business owners and managers will not accept a business loan believing they can do better, which they very well could, but end up putting off the opportunity for 6 months or more searching for the best business financing deal.

Ugh!

What would you rather do, make an extra $100,000 a year or save yourself $5,000 in interest costs?

I personally hate the term no brainer as something can always go wrong with anything whether you have a brain or not, but this is as close to one as you’re going to get.

Of course you don’t want to accept anything with crazy terms that are going to back you into a corner or cause other problems.  I’m talking about simple stuff like interest cost, which can add up to large dollars, but don’t impact your ability to get going and take advantage of your opportunity.

It may seem ridiculous that you can’t always secure business loan terms you should qualify for in the time period you want, but that’s the way the commercial money system can work.

Bottom line, if you can get reasonably close to your expected terms for a business loan and get making money faster, you will likely be miles a head of the game versus holding off making money as you search for cheaper and/or better term money.

At the end of the day, when you’re sitting on some beach, enjoying the benefits of the money you’ve been able to make by moving fast on opportunities that presented themselves, are you really going to look back on things and think, boy I paid $20,000 too much on interest on that deal that made me over $1,000,000 10 years ago?

I don’t think so.