At some point, almost every small business finds itself needing extra help to purchase new equipment, upgrade technology, increase marketing efforts or cover other critical expenses.
By John Donohue
In fact, CIT’s recent survey reports that in the next twelve months, 88 percent of small business owners expect to make an investment in their small businesses. Knowing where to start can be tough, and taking the leap into starting a relationship with a lender can be daunting. Money is a sensitive and key part of business and working with an experienced lender should bring you peace of mind. Lenders don’t expect you to be a financing expert and can help guide you in the process to funding your small business. Below are five ways small businesses can maximize the process of accessing capital to ensure they get quick, reliable funding suitable for their needs.
Choosing the Right Business Lender
Any positive business relationship requires the two parties to trust one another, something that can be particularly challenging in the evolving technology landscape facing businesses today. With more business relationships taking place online instead of in person, it can be tough to build trust with the potential lenders you’re considering. It’s possible to combat this initial skepticism by researching the lenders you are looking at thoroughly. Seek out feedback from previous customers on sites like Trust Pilot, Yelp and Better Business Bureau (BBB). Look for a lender who has knowledge about your specific industry and a proven, time-tested track record to ensure your loan is from an experienced source.
Tap into Educational Resources
Educational resources can help inform small business owners. The U.S. Small Business Administration’s Learning Center provides online courses to help you learn about the financing process and a number of other relevant small business topics. Non-profits such as Operation HOPE, a global provider of financial education programs, also provide training and educational tools through its Office of Small Business and Entrepreneurship. As part of Financial Literacy Month, CIT and Operation HOPE recently created a new video series called Launch and Grow profiling small business owners who share their tips, challenges and success stories. The ten videos touch on topics such as accessing capital, recovering from mistakes and leading through growth, with the intent of educating and empowering small business owners.
Weighing the Options
Once you think you’ve found a lender that you’re comfortable working with, consider the products or services they offer and how each might serve your business’ needs. Think about how much financing you’ll need, whether you’re interested in a loan or a lease, the term lengths and rates offered, and the funding speed the lender promises. Many of today’s lenders offer funding that can be completed as quickly as the same day you are approved. CIT, for example, offers an online application process that takes as little as three minutes in most cases. If you are leasing a piece of equipment or technology, you should also consider what your possibilities are at the end of the financing agreement, like a $1 buyout or fair market value option.
Understanding Your Agreement
Before making any commitments to a lender, make sure you understand what each figure in your contract means. Financial contracts are often filled with dense legalese and jargon, so keep lines of communication open with your finance partner to ensure you thoroughly comprehend what is being proposed. Take into consideration total payments, monthly payments and any additional costs like taxes or insurance. Instead of looking for the “best deal” as we are often drawn to do, look for a rate and monthly payment that works for you and your specific business needs. Additionally, check to see if your lender has a solid financial backing, preferably from an established financial holding company.
Closing the Deal
After you’re confident that all your questions and concerns have been addressed and you feel comfortable in your chosen solution and lender, you’re ready to sign the deal. You’ll receive your funds, new equipment or technology soon thereafter and be on your way to running your small business.
Being prepared when you are searching for financing for your small business will help reduce any stress you may have about the process. Seeking funding can seem intimidating at first, but can ultimately be a quick and stress-free experience with the right lender. With funding from a supportive and knowledgeable lender, you’ll be well on your way to meeting your goals and growing your small business.
John Donohue is a managing director and head of CIT Direct Capital. With more than 25 years of experience as a small and mid-sized business lender, CIT Direct Capital has lent over $4 billion to more than 100,000 businesses spanning a variety of industries. CIT Direct Capital provides an online lending platform with 6-month to 7-year financing at competitive prices and remarkable speed. CIT bolsters this effort with more than a century of experience providing financing, leasing and advisory services to small and middle market businesses.
The survey was conducted online within the United States by Harris Poll on behalf of CIT between February 6 – 20, 2018 among 2,185 U.S. adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. Respondents were able to select more than one response for each survey question, meaning the percentages together do not total 100 percent. ©2018 CIT Group Inc. All rights reserved. CIT and the CIT logo are registered trademarks of CIT Group Inc.