While they may have the same branding of a business loan, each one is going to be different from the next in various ways. Some of the main differences include length, term, qualification requirements, and so forth. It’s worth taking the time to compare business loans before applying to ensure that you’re picking one that meets your needs and one that your business will likely be approved for.
Aiming For a Smooth Application Process
You want to be approved for your loan as quickly as possible. Therefore, it pays to make sure that any lender you’re potentially thinking of borrowing money from has a smooth application process.
While this may be a surprise to hear, some lenders still require traditional physical documents to be administered before a loan application can be approved. This can add on unnecessary time for visiting the lender in person or mailing documents back and forth. Instead, opt for a lender who offers an online application process that allows you to easily upload any necessary documents.
Understanding Processing Fees
You’ll come to find out real quick that different lenders charge different fees. Some may not charge at all for you to submit an application for a business loan. In contrast, others may charge an up-front fee or a fee included in the loan if you’re approved.
These rates can significantly vary from free to a couple of thousand dollars. Paying attention to these processing fees is a must to ensure you know what you’ll be paying to actually get the loan funds.
Another reason you’ll want to compare business loans is to determine the various interest rates available to you. While it’s important to note that you won’t be given a specific interest rate until you’re approved for a loan, you can be given a range of potential interest rates from the lenders.
It’s pretty easy to think that interest rates for business loans are all going to be in the same range. The reality is that they’re not. Some lenders can get you interest rates in the 6 to 8 percent range, while others may start at the 10 to 12 range. Why pay for extra interest expenses when you don’t have to with the right lender?
Discovering What You Need to Apply
The underwriting process for every business loan is going to be different than the next. For this reason, it’s crucial that you have a clear idea of what documentation a potential lender is going to need to approve your business loan. Some lenders may ask for income statements, while others may require intricate details like a copy of your business plan.
According to Lantern by SoFi, an incomplete application for a business loan can lead to snags in the underwriting process. When you go to submit your application, you want to ensure that you have all the information necessary. You may decide to skip over certain lenders who require more documentation for their applications than others.
The process of getting a business loan shouldn’t be taken lightly. Take your time, do your research, and compare business loans from various lenders to ensure you’re getting exactly what you need.