We interviewed a number of small and medium sized business owners to ask them where most business owners go first when they realize that they need a commercial loan. As you can imagine there is a discrepancy across generations as well as business size. Here are the top 3 First-Stops of business owners that are looking for a business loan.
Most business owners go right online when looking for a business loan –
Interestingly enough, most entrepreneurs these days find themselves going online to conduct research around the types of funding available for their business. Using search terms like “business loan” and “business loan for industry” From there they will apply on one or two “Business Loan” sites just to “see what’s available” and connect with Commercial lending specialists to pick their brain. Often times there is zero intention in actually working with Commercial loan consultants and business loan websites but as the relationship develops the business owners are more likely to give them a shot with a quote and hearing their recommendations on what types of loans they offer or what types of business funding they have access to.
The 2nd most popular place for business owners to start their business loan search is their CPA –
Well this seems to make a lot of sense. Let’s go speak with the person who handles our finances and ask them questions about business loans. While this is the 2nd most popular first step to secure a commercial loan for a business most of the entrepreneurs who also selected CPA as their first place to look also mentioned that their CPA did not really know where to go or weren’t prepared to make a hard recommendation. I thought that was interesting that CPAs weren’t typically so eager to make recommendations on where to find business loans so I asked a few myself. The majority of CPAs who answered said that they wouldn’t recommend a specific provider because they don’t want to be accountable when/if something goes wrong or they want to avoid any sort of conflict of interest if they are to recommend their friends.
The 3rd most popular first stop for business owners to find some extra cash is… Well, duh, their local banker –
To many entrepreneurs the local bank may be a no-brainer. After all, aren’t they the ones who sell this sort of thing? Interestingly enough it was only the older business owners that thought about going to their local banker. The younger business owners are all banking online and don’t necessarily have a relationship with their banker and some haven’t even set foot into their local bank branch since they set up their business bank account. The owners of larger companies were also likely to ask their local banker as larger more sophisticated businesses are typically speaking with their banking institution more frequently than the smaller businesses.
Chances are, if you go online and search for a business loan you will come across professional loan consultants and business finance consultants. As most of them are no-fee(they are paid a commission by the lender) they can be a great option but unfortunately with all of the noise surrounding the commercial loan industry it’s hard to find a reputable person that you trust enough to recommend business finance institutions. There are a lot of options for no-fee commercial loan companies that are industry and loan-type specific. For example Myfashionfinance.com is industry specific and secures financing for fashion and apparel brands. Companies like TheBestFactors.com secures factoring and asset based funding only and are not industry specific.