Capital is an invaluable asset when running a business. From retailers and advertising agencies to automotive mechanics and interior designers, all businesses need capital. When a business owner seeks a loan, however, he or she should cultivate a positive relationship with their lender. By nurturing this relationship, business owners can take advantage of the following benefits of developing a quality relationship with their lender.
Better chance of getting approved
Business owners are more likely to get approved for a loan if they have a positive relationship with the lender. According to Statista, more than half of all business loan applications are rejected by small banks while big banks reject more than three-quarters of them. Business owners can increase their chance of getting approved for a loan by proactively communicating with their lender and informing them of their financial status. Businesses are even more likely to get a loan approved by working with a private lender or through a small company.
Smaller loan amounts
While private lenders typically offer smaller loans than banks, nearly all lenders have a minimum loan amount. Unfortunately, this makes it difficult for small business owners to secure capital. If a small business owner doesn’t have the cash flow or credit for a $50,000 loan, the lender may reject his or her application. To overcome this challenge, business owners should create a positive relationship with their lender. After gaining their trust, the lender may offer smaller loans to the business owner, especially if it’s a private lender.
They may waive fees
With lenders charging $10 to $40 for late payments, it’s important for business owners to pay their bills on time. But unforeseen problems may arise that prevent an owner from paying his or her bills on time. If an owner has a strong, positive relationship with his or her lender, however, the lender may waive late fees or provide a more flexible payment plan that works with the lendee’s schedule.
Business advice and contacts
Lenders can even provide business owners with personalized advice to help them succeed. They know what it takes to make a business thrive, and they also know what causes businesses to fail. Furthermore, lenders work with a variety of professionals and entrepreneurs on a regular basis. If a business owner has a strong relationship with his or her lender, the lender may refer some of these contacts to their business.
A lender is more than just a person or financial institution that offers capital. Lenders are the driving force behind every profitable business. By cultivating a positive relationship with their lender, business owners can take advantage of these benefits and more.