Just because you’re a small business owner doesn’t necessarily mean you’re a small business financing expert. But guess what? Lenders don’t expect you to be.
Money is an emotional subject. It affects how we live and work and how we make many of our decisions in life and business. Here’s how you can dispel those financing fears.
Don’t get swindled
Everybody knows somebody who has been swindled by one company or another. Now with business transactions taking place online more times than in person, trust is a key component of building a working relationship. Trust is even more essential when you’re talking about money and finances.
Our advice to small business owners and consumers is to know the company you’re working with. Make sure they’re well known and well trusted by taking a look at their customer feedback on sites like Trust Pilot, Yelp, and BBB.
Read the fine print of that contract before you sign it. If something isn’t clear to you, ask questions! Also, just because it’s in the contract doesn’t mean it’s not negotiable. Know what you’re signing so that in the end you aren’t locked into an unfavorable contract.
Am I getting a good rate?
We constantly see 0% APR or mortgage rates in the 4’s. In a society where we are rate driven and always looking for the “best deal,” we expect all financing terms to be alike when in actuality, financing rates can be calculated many different ways. Remember, not all calculations are equal.
A good way to determine the value of what you’re getting is to look at the monthly payment. Are you getting a monthly payment and term of loan that work for YOU and YOUR business? The most important factor is that you can afford to pay your bill on time, every time.
Remember, too, that when comparing quotes from different companies, make sure you’re comparing apples to apples. Be sure to use the amount you’re borrowing – the term of loan – to compare what you’re being offered for a monthly payment.
Fear of being rejected
Most people have a few skeletons in their closets. Credit reports are one tool lenders use to determine a borrower’s credibility. If your credit report shows a lack of past diligence in paying back your debts, you might be rejected when applying for a loan.
Sometimes, very good people, for reasons beyond their control, have credit issues. And unfortunately, that’s a real barrier to entry in the world of small business.
Take a look at this article to learn what other factors play into consideration.
How will this transaction affect my credit?
You may be surprised to hear that although your personal credit is used as a reference to determine your risk, you may only see an inquiry reported on your personal credit report and not the debt itself. Unlike most lenders, Direct Capital does not report your loan or lease on your personal credit report. Therefore, you can use your personal credit to help build your business credit without hurting your FICO Score, and you don’t have to sacrifice your personal credit for your business.