There are changes going on in the commercial lending market that are building to a peak like a roller coaster. Over the past three years the tight fists of lenders have been slowly loosening their grip on commercial loans, and this has only escalated over the summer. There are those who are screaming “asset bubble,” while others are proclaiming that the economy is finally recovering and this is proof. Nay sayers point to the fact that many businesses are not using the funds for expansion that boosts the economy, but rather to refinance at cheaper rates and save money.
What does all of this mean for the entrepreneur seeking funds to start a business?
The Loosening Grip
Lenders are more freely letting go of commercial loan funds. Now is the time to give it a shot if you have been considering starting a business but held back for worry over finding a commercial business loan. Banks are increasing commercial lending at rates that are making some economists nervous, but if your intent is to start a business and put more into the economy, you are not the concern. You can only benefit from this lending boom.
Not for Everyone
While the lending marking has gotten considerably more friendly, there is still no one willing to give out commercial business loans to just anyone. There are a few factors that figure into eligibility still, and to be certain you are on the front lines when a lender does decide to let go of funds to start a business, the following should be considered.
There is no denying the lending and borrowing process takes time. That said, realize that even after you do your part, the lender has several hoops to jump through before you will have funds in hand.
Net worth is an essential variable in the lending formula. There needs to be something to collateralize, so if you haven’t already, be certain to have a Statement of Net Worth drawn up professionally so that you are prepared.
This is how the lender knows you are able to pay. Either show them the cash flow, or show them how the funds will help you permanently correct any cash flow issues you may be having.
No two lenders are exactly alike. They are all looking for something different in a borrower, so if you are turned down do not give up. You have to find the right lender to fit your specific needs.
Biz2Credit can help entrepreneurs find commercial loans through its network of over 1,200 lenders who look for prescreened borrowers. Get started today by visiting Biz2Credit.com to find out more.