6 Reasons Why You Should Work With Lenders To Finance Your Business

reasons work with lenders finance business loans

In order for your business to grow, there’s one thing that you necessarily need–capital. However, growing your business with just your equity or capital may not be enough. To be able to invest in expansion, advertising, equipment, and property necessary to run your business, you’ll need some help from banks. 

Here are some of the reasons why you should work with lenders to finance your business. 

1. Faster Funding 

If you need funding fast, then working closely with your lenders to finance your business will be quicker. Keeping them in close communication will allow you to air out your needs and timeline. At the same time, the lenders will be able to ask for all the information and documents they need to speed up the process. They can also recommend alternatives to you. 

One of the fastest ways to get a short-term loan is online lenders in Canada. With that, you can do the application process and submission of documents online. Then, if the lenders have follow- up queries, they can just email you. After your application is approved, the funds will be logged into your account for your use. 

2. Maintain Good Cashflows 

There are times when you just need to borrow money to augment funding gaps when it comes to your working capital. Being a business, you might need to extend credit terms to your customers to be more flexible. Because of this, there will be a period where you’ll lack money and wait for your receivables. 

You can work with banks to determine your days receivables and payables, so you can estimate the amount of money you need to maintain good cashflows. They’ll be able to show you products, such as receivables financing, to support your business’ working capital requirements. With this, you’ll have better cash flows to support your business. 

3. Equity Financing 

Working with your lenders could also open up a range of products, including those that involve equity financing. 

This can be done through capital markets via an IPO (initial public offering) in the stock market or bond issuance. Both of these things can be arranged and underwritten by your lenders. They’ll be a huge help in connecting you to other financial institutions that can aid in these efforts. 

4. Build Credit 

Another reason why you should work with lenders is to start building good credit. Credit history will be important for your business in the long run because it’ll establish credibility for your business in the future. 

Once you take out a loan, make sure that you pay them on time and in full to establish a good credit history. This credit history is also something that potential investors might take a look at in the future. 

5. Purchase Inventory 

There will be times that the demand for your products will be high, but you won’t have the capital to purchase inventory in time to service the demand. Working with lenders and getting a short-term loan will help you gain funding to start purchasing inventory so that you won’t lose the opportunity to service potential customers during peak season. 

Once you’re able to sell the products, then you can pay back the bank once again. 

6. Improve On Terms And Amount 

Working with your lenders will also allow you to negotiate and improve on the terms of your loan. For projects or acquisition of new equipment that’ll need a larger amount of loans, you need to negotiate the terms. Any savings you can get on interest rates and fees will significantly impact your business. 

To get good terms, it’s vital that you develop a good working relationship with your lenders and strike the best deal you can get. Terms that you can move around are interest rates, fees, and financial covenants. Additionally, you can also negotiate for a clean loan instead of a secured one, where you need to put up some sort of collateral. 

Moreover, developing this relationship will put you in good stead with the lenders in case you need more loans in the future for other projects and expansion. Since they’ve already worked with you previously, they’ll be more comfortable to lend to you and relax the terms as well. 

Conclusion 

Don’t be scared about carrying some debt. There are good debt and bad debt, and working with your lenders can guide you to carry good debt. This debt is considered good since it’s for the advancement and for the future of your business, which will eventually pay off in the long run. 

Given the reasons above, working with lenders to finance your business can be very beneficial for you.

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