How Your Small Business Can Negotiate Better Loan Terms
Small businesses often struggle to gain access to debt markets and when they do gain the access to loans are often hit with punitive interest rates and fees. Higher interest rates and fees can limit the ability of the small business to succeed in the future and should be considered before entering a loan agreement. It is in the small businesses best interest to negotiate the best terms possible. This article will highlight some of the most important ways to obtain better terms on small business loan.
To start with a company should understand what they are looking for from a loan so that you can better negotiate to your advantage. Some companies are looking for flexible payment and longer repayment terms, while others are looking for lower interest rates. Understand your priorities and work towards getting a quick loans that gives you what you want.
Consider what you can offer to the lender to provide them with security. Sometimes a personal guarantee can be useful. Other times it is a lien on assets or a trademark that a lender is looking for. Understand what would make a difference to a lender and negotiate by offering some items that you don’t care about t lower your risk profile.
Finally, shop around and explore the different lending institutions out there. Sometimes a standard bank is not a great option and a private investment buying convertible debt is a better solution. Shop around and see what lenders there are and what they are offering your business.