Small business financing is a crucial but sometimes confusing part of starting a business. Potential business owners have so many more options available to them today then just 10 years ago. It’s important to enter the financing process with a clear idea of what to look for in a lender, and what to avoid.
The online lending market has grown exponentially, and while that provides more options for potential borrowers, it also creates more pitfalls to be aware of. According to Entrepreneur contributor, David Nilssen, online banks aren’t regulated the same way brick and mortar banks are. Be sure to read the terms of your loan carefully. Some borrowers have found themselves owing as much as 30 to 80 percent in fees and interest.
While the world of online lending is growing in leaps and bounds, don’t count out banks. In December 2015 Biz2Credit Small Business Lending Index reported that banks were approving twice as many small business loans as they were a year before.
M&T Bank Corp. Chairman and CEO Robert G. Wilmers called for the SBA to “ensure more companies gain access to capital”, and they did just that, not only in M&T’s western New York stomping ground, but nation wide. In 2015, the SBA signed off on $23.6 billion in small business loans. Since these loans reset quarterly, you may find yourself footing a higher interest rate down the road. Many experts are predicting higher 2016 interest rates.
With the presidential election coming up later this year, expect business to slow down between the months of August and November. Many businesses and lenders will be waiting to see how the outcome of this election will affect the overall economy before making any big moves.
Are you in the process of financing your small business? Contact us to see how we can help.