Finding a Business Lender
1. Choose Publicly Held Business Banks over Private Lenders
Generally public business banks have greater capital cushion and can afford to lend at lower rates than private lenders. Retail business banks lend at lower rates since their cost of raising capital is around 200 to 300 basis points lower than wholesale lenders.
2. Verify Your Business Bank is FDIC Approved
Visit www.fdic.gov for a list of all the FDIC approved lenders. FDIC approved business banks can collect deposits, which lowers their cost of funds. Also, regulations restrict institutions from having spreads over 300 basis points. For example if a business bank borrows at 5 percent, they cannot lend at more than 8 percent.
3. Get the Scoop on Your Business Bank
Business brokers and other businesses can be a valuable source of information on different business banks. Inquire about the responsiveness of a bank and whether it is approved by the SBA. SBA approved lenders can offer more financial products since the government guarantees up to 70 percent of the loan amount.