7 things to look for when comparing business lenders.
1. Competitive and fair pricing.
Pricing for business loans should be upfront, clear, and easy to understand. Credible finance companies will not lend your business more money than you can afford, and they will use a risk-based approach to ensure your business has access to funding at a fair price. Business loans can have a wide range of cost structures, so make sure to compare finance options from multiple lenders.
: You can usually calculate the total cost of your business funding with simple math. When comparing lending costs, consider how the lender calculates the cost of the loan, the term of the loan, as well as any additional fees.
2. Real people providing ongoing customer service.
Good business loan lenders use technology to make the loan application process easier and faster. But the best loan companies also provide access to real people to answer questions and help your business through the lending process every step of the way. After your business has secured a loan, it should be easy to access account information and get answers to your questions online or by contacting customer service. Don't forget to ask about your financing options if your business decides to borrow additional funds.
3. A simple application process.
Online lenders typically have a streamlined loan application process. Often, an online lender will require fewer documents than traditional bank loans. For larger business loan amounts, more paperwork may be required, but most small business lenders start with your recent business bank statements or sales history to determine how much your business might be eligible for. By simplifying the application process, these small business lenders can get you an answer faster while often reducing the number of hoops your business is required to jump through.
4. Reputation and customer reviews.
Customer satisfaction is a helpful way to evaluate a potential small business lender. Look for consistent, positive customer reviews, a high rating from the Better Business Bureau, and industry awards and recognition. It's a good idea to seek out a small business lender that has an easy-to-find phone number and contact information. It should also have a visible 'About Us' section on its website with company news and frequently asked questions.
5. Hassle-free payment.
Depending on the type of small business financing you secure, payments might be made on a daily, weekly, or monthly basis. Make sure you understand your payment schedule upfront as well as the lending term (the length of time you will be making payments). The best lenders make repayment simple for small business owners, so look for automated payments made directly from your account.
1. Commission-driven lending brokers.
In your search for small business financing, you might come across individual business loan brokers offering access to small business loans. In this case, an individual broker acts as an intermediary between a small business owner and a business lender. One thing to know about brokers: They often work on commission. This means they may be incentivized to sell small business owners the most expensive financing options. Keep this in mind if you decide to go through an individual lending broker.
2. Hidden fees.
Business owners who are unfamiliar with small business loans may not be aware of the additional fees some business loans charge beyond the cost of funding – some loans have a laundry list of hidden financing fees. As you compare your financing options, watch out for the following lending fees:
Whether these fees are one-time or ongoing, make sure you're fully aware of the different kinds of fees and how much each costs before you secure a business loan – they can add up quickly.
When it comes to choosing a business lender that best fits your small business needs, make sure you know what to look for, and what to avoid. PayPal has two financing options for your small business.* Both business loan options give your business fast access to cash at a competitive price.
*The lender for PayPal Business Loan and PayPal Working Capital is WebBank, Member FDIC.