3 Essential Questions for Choosing the Right Lender for Your Business Loan

3 Essential Questions for Choosing the Right Lender for Your Business Loan

Selecting the right lender the first time can be complex, but it ultimately boils down to three key questions about how the bank relates to you at this moment in time for your current situation and circumstances. At LoanBoxBox, we match businesses with SBA lenders based on three primary categories: experience, focus, and criteria. For franchise borrowers we add a fourth component which is brand familiarity.

1. Past Experience: Is the bank experienced in lending to my industry?
   Look for lenders with a proven track record in financing businesses like yours—taking into account industry type, business age, location, and loan amount.

2. Current Focus: Is the bank currently focused on lending to borrowers like me?
   Find lenders who are actively motivated to support business owners seeking loans for your intended purpose and amount. SBA lenders have varying focuses, influenced by factors like industry type, loan tiers, and geographical area. Remember, a bank's past lending habits don’t always predict its future focus due to changes in personnel and market conditions.

3. Matching Criteria: Can I qualify for the bank's approval criteria?
   Ensure the lender’s policies align with your qualifications (credit score, cash flow, collateral, etc.). While the SBA framework is consistent across lenders, individual criteria can vary significantly. Each lender has its own preferences for business types, loan purposes, collateral requirements, and more. Each has their own different combinations of policies for credit score, debt service ratios, loan-to-value, debt-to-income, equity injections, net worth, and more.

And for franchise loans add:

4. Brand Familiarity: Is the bank already familiar and favorable of my franchise brand?
It makes a big difference in borrower experience and getting the right lender right the first time when the bank is already familiar with your brand. Not having to explain or try to sell your brand to a bank is refreshing and the bank already having and approving your brands business plan is a big time saver.

It’s clear why statistically most small business borrowers don’t end up with the right matched lending partner since most borrowers are randomly or narrowly approaching banks when they need a loan. LoanBox fixes this.

Thinking Inside the LoanBox Saves a lot of Time, Money, and Stress

To streamline your search and increase your chances of success in matching with the right lender the first time, think experience, focus, and criteria. Or even simpler—think inside the LoanBox. LoanBox likely has more than a handful of banks who want to lend to your brand, who is experienced in your industry, who is focused on lending to borrowers like you (including startups/acquisitions/multi-unit/new vs established business), and which you would likely also meet their qualifying criteria. Why throw darts and randomly call banks when streamlined financing is found inside LoanBox?

This article is authored by Darin Manis, founder of LoanBox.