From loan terms and conditions to the loan application process, individual business lenders tend to have many, significant differences. Because of these differences, it's critical to be picky when you're selecting a business loan lender. After all, it's neither easy nor cost-effective to switch lenders until after your loan term expires.
If you're still tempted to hurry up and pick a lender and be done with it, consider these five reasons to be a bit more selective.
1. Long-term lending relationships matter
Many entrepreneurs who haven't dealt with small business finance don't realize the value of a long-term lending relationship. Don't make this mistake; finding a lender who can continue to serve vou as vour needs change and evolve makes financing a far more productive experience.
2. Maximum cost-efficiency
It can be overwhelming to realize just how many factors can influence the cost of your loan. The length of your loan term, fees, interest rates, and penalties all change the amount and timing of your borrowing costs. Yet even between fairly similar lenders, there tends to be quite a bit of variation in loan structures.
3. Faster approval times
When lenders underwrite a loan, they're evaluating the default risk of you and your business. To evaluate risk, lenders generally look at five characteristics of a borrow-er.
4. Optimal loan program
Just as you should expect the quality of service to vary from lender to lender, you should expect each lender's loan offer to differ.
5. Terms and conditions vary widely
Another highly variable aspect of business loan lenders is their terms and condi-tions. While these terms and conditions can be a lot to digest, it's important to understand their impact. Even a seemingly small difference, like a prepayment penal-In this way, pickiness in choosing your business loan lender can mean the difference between profit and loss.