3 Essential Questions for Choosing the Right Lender for Your Business Loan

3 Essential Questions for Choosing the Right Lender for Your Business Loan

Selecting the right lender the first time can be complex, but it ultimately boils down to three key questions about how the bank relates to you at this moment in time for your current situation and circumstances. At LoanBoxBox, we match businesses with SBA lenders based on three primary categories: experience, focus, and criteria. For franchise borrowers we add a fourth component which is brand familiarity.

1. Past Experience: Is the bank experienced in lending to my industry?
   Look for lenders with a proven track record in financing businesses like yours—taking into account industry type, business age, location, and loan amount.

2. Current Focus: Is the bank currently focused on lending to borrowers like me?
   Find lenders who are actively motivated to support business owners seeking loans for your intended purpose and amount. SBA lenders have varying focuses, influenced by factors like industry type, loan tiers, and geographical area. Remember, a bank's past lending habits don’t always predict its future focus due to changes in personnel and market conditions.

3. Matching Criteria: Can I qualify for the bank's approval criteria?
   Ensure the lender’s policies align with your qualifications (credit score, cash flow, collateral, etc.). While the SBA framework is consistent across lenders, individual criteria can vary significantly. Each lender has its own preferences for business types, loan purposes, collateral requirements, and more. Each has their own different combinations of policies for credit score, debt service ratios, loan-to-value, debt-to-income, equity injections, net worth, and more.

And for franchise loans add:

4. Brand Familiarity: Is the bank already familiar and favorable of my franchise brand?
It makes a big difference in borrower experience and getting the right lender right the first time when the bank is already familiar with your brand. Not having to explain or try to sell your brand to a bank is refreshing and the bank already having and approving your brands business plan is a big time saver.

It’s clear why statistically most small business borrowers don’t end up with the right matched lending partner since most borrowers are randomly or narrowly approaching banks when they need a loan. LoanBox fixes this.

Think Inside the LoanBox

For smart business lending think inside the LoanBox. Just log in, answer questionnaires, complete your loan package, and the platform will match you to the exact right lenders you match 100% of dozens of criteria points. Select which lenders you want to access your loan package and offer a loan proposal. Receive loan proposals from interested lenders, select the winning lender, and always know what’s going on from application to funding and what’s needed next in the loan process. Or have a friendly LoanBox Advisor just handle everything for you.