When you have your own business, you must understand that you should make each penny count. You really have tried t negotiate great costs on office supplies, you have the best perks on the business credit card. However, have you thought on trying to have a low interest rate on the commercial loan? On the course of loan term, you will be able to save thousands in the interest payments by getting such lower rate.
One really common way that you can get a great interest rate is to search for and get the Small Business Administration loan. There are commercial real estate loans and other types of loans that are backed by the SBA. Such means that your risk factor considered by the bank is much lower due to their backing. You won’t have to come up with a huge down payment and you can finance the loan on a longer term and such can be really helpful for your current and the future cash flow.
When you have a really valuable collateral item that you put up, you can also realize such significant savings on the interest rate. Since you will finance less, has lower risk, the banks would want to do more business with you. Also, it holds true when you finance capital equipment since the equipment itself is the collateral which would be sold when the loan is called. The ratio of the loan to the value of those items purchased is low and this is going to be really helpful to you.
Learning The “Secrets” of Loans
Moreover, you can try to negotiate the terms with the bank, particularly when you have a profitable business and the personal credit score is really high. You need to consider applying between 10-12 institutions. If you apply at many lending institutions, you will be able to end up with all of them to compete for your transaction.
22 Lessons Learned: Loans
The best place to have a loan with lower interest rate that is from the bank. Often, they already have a relationship with you and they may use that if they are evaluating the credit-worthiness. If they know that you are a solid client, then this can go a long way with the lender.
There should be a track record of profitability and a solid business plan. Such are very important regardless if you get that loan. If you must buy so many equipment but you don’t have that credit history or such long track record, then you can consider lowering the amount which you request and purchase the items in stages. Such can give you the opportunity of building a history that can make the banks more favorably on you.