If you are a small business owner, how can you make the most out of your relationship with your lender? How do you leverage the relationship for the best outcomes for your business?
It doesn’t matter what type of business loan you take out, you will want to keep in mind that there are various things to manage throughout the life of the loan beyond just the actual repayments.
In our experience, we know that when people apply for business loans, the most common questions they ask are how much money they can borrow and how long it will take to get for them to get the money.
Know The Details
There are more questions to ask beyond just what the repayments will be. Most businesses usually forget to find out the details involved in the administration and management of their relationship with their lender on a day-to-day basis.
You need to know all the details, and by asking about them, you will also be able to find out if the lender is right for you and if you are the right match for them. Ask your lender exactly how the loan will work – and go right down to the very last detail. Don’t be afraid to look foolish by asking questions. That’s the job of the lender, to answer all those questions and make sure you’re comfortable with the information that is given.
What could go wrong?
If you don’t find a good match in terms of a lender, you might get the money but in the long-term be frustrated and aggravated. You could:
- Get stuck with more administrative work
- Have to wait longer to get your loan
- Run into problems in your relationship with your lender
- Reduce the chance that you will be able to borrow more funds
- End up paying less attention to running your business
- Face rising costs
Tips To Ensure A Good Relationship With Your Lender
So how do you avoid all of this? How do you ensure that you have a good relationship with your lender, right from the start?
- Start by asking hard questions, including how they have worked with companies similar to yours.
- Find out what paperwork they need and how they need it.
- Be honest and open with the lender. If you’re holding back information or have secrets, this could hurt your chances of being approved and waste their time.
- Make sure you tell them about your business before you ask them about their pricing (using a business loan repayment calculator). In the situation that a lender tells you about pricing before you have described your business, it is probably because they don’t understand your business. It is important to remember that one price will not fit all circumstances.
- Write down all the questions you need to ask your lender and let them know exactly why you need the loan. It is not enough to just tell them you need additional cash flow. They will want to know why you need the funding – and if they can address your needs in the long-term.
- Make sure you know what you are paying for at the start of the process, and don’t wait until somewhere down the road to find out, which would certainly create problems in your relationship.
A final bit of advice: if you can learn about the lender’s product before you complete an application, they in turn will want to take the time to understand what your business is about. That is the basis of a great long-term business relationship – that you understand and are clear with each other. Then you can turn to this relationship whenever the need arises and be confident that you will get support.
FundingPro is an online broker for business loans across Australia. Our expert staff will help walk you through the process every step of the way, apply now.