Picking the right business loan is important for small businesses seeking capital because there are so many different lending products and services on the market today, But before they select their choice, businesses should make sure they also consider these factors such as the length of the loan, the loan amount and even the industry they're in.
Obtaining the right business loan entails more than simply securing capital. It ensures that the company has a future, that it has ample liquidity and enough capital to remain in operation while it pays down its debt, and that the company can secure additional credit in the future. Too many times business owners aren't aware of all the options they have in today’s business lending environment, and they often do not consider what is needed on their behalf from lenders.
SECURING YOUR LOAN
Your company needs financing, but research and due diligence puts your personal information at risk. The more options you consider, the more vulnerable you become. All lenders want to run your credit and access your personal information. Do not let them. Let Mayava find you the best rate available, safely and quickly without putting you and your company at risk.
Let’s see which business loan option is most appropriate for your particular business.
Physicians & Medical Offices
Medicine is a recession-proof industry that continues to grow and evolve. Typically physicians and medical offices have access to a wide range of lending options. Moreover, the medical industry is subdivided into different segments that attract their own respective financing resources. For example, some lenders in the medical space focus their underwriting on insurance reimbursement while others center strictly on remittances from the practice.
Among the choices available, physicians can access the Small Business Administration’s (SBA) 7a program that allows for expansion, consolidation and equipment financing. Private lending resources offer relatively similar condition-free financing but without the paperwork and due diligence required from traditional sources of financing. These options may come with different terms and conditions, and have higher fees and interest costs.
Medical markets appeal to alternative lenders and conventional ones. Merchant cash advance lenders appreciate medical offices because they produce steady remittance revenue. Hard money lenders like medical properties because they are relatively stable sources of income. SBA lenders like the medical niches for the same reason, and they'll even provide refinancing resources.
Generally speaking, medical offices and physicians have access to more lending choices and services than other industries. But every lending situation is different, and so is every lender. Physicians still need to perform their due diligence and exercise the proper caution in considering their options.
Transportation companies might keep the American economy on the move, but they are also some of the riskiest bets for lenders. Due to factors such as their cyclical business cycle, fuel and maintenance costs, driver turnover and high liability insurance premiums, transporters are a niche market for lenders. As a result, the transportation industry does not enjoy the same range of traditional and alternative financing options as the medical industry.
Because transporters base their valuation on their revenue as well as on their equipment, these considerations play a larger role in lenders' underwriting decisions than a piece of real estate would. A hard money loan might not be the best solution here. Instead, equipment financing, invoice factoring or a merchant cash advance might be better suited for a transporter. Equipment financing means that transporters can secure capital using their fleet and equipment as collateral, whereas invoice factoring from B2B transactions and merchant cash advances from B2C transactions can act as collateral against the revenue of the company.
... lending options for transportation companies must be carefully considered.
Transporters are an important lending niche, but they do not enjoy the same treatment enjoyed by other industries because their underwriting decisions tend to be based upon depreciating assets such as trucks and the fluctuating prices of fossil fuels. So transportation companies must carefully consider their lending options.
Commercial Real Estate Companies
Commercial real estate companies have advantages over transportation companies and even medical practices. Not only can they secure capital through both traditional and alternative sources but they can also choose different financing options. They should still conduct their due diligence because of the transaction size of the loan they're seeking.
Commercial real estate companies have several lending options at their disposal. They can avail themselves of more traditional debt and equity financing against the valuation of the property, as well as resources from traditional financing institutions. Commercial real estate companies can also access the hard money loan market for their capital. They can utilize the loan proceeds without condition and be subject to underwriting requirements that are less restrictive than traditional financing options.
Hard money loans let commercial real estate owners avoid having to put up their own personal assets as collateral. Since underwriting decisions for most hard money loans are based on the value of the property and not on the creditworthiness of the company or owner, the property owner can minimize the risk compared to traditional and alternative lending options.
Commonalities Despite the Differences
Even though these industries have different lending options to consider, they share some common threads too. They all must exercise caution and conduct due diligence. They also have to consider the loans' terms and conditions, interest rates and duration.
But more importantly, they want the most cost efficient and quickest way to secure capital and to ensure liquidity. They may pursue these goals in different ways, but whether they're big or small, old or new, these businesses all want to get there just the same.