Introduction
I've decided to open the book of secrets and share some of the inner workings of my industry with you.
Lenders are aware of your situation.
They all pull reports, read your background, and analyze your financials.
If you are shopping for a lending partner, and you are indiscriminately sending your info out, chances are high that lenders know that. All lenders review similar information, so they will ideally have a good idea of how much risk they are taking by offering you financing. You will not get better terms simply by applying with multiple lenders or using multiple brokers/consultants at once—in fact, that action produces the opposite result. The more times you apply; the more finance professionals you have approached and have working for you, the lower your integrity, and your impression is, to them. They want to work with people who are steadfast and do not flip flop or act in a fickle way. Exclusivity is important in this business, and the business owners who get that, get financed quicker and easier.
You won't get any better terms with multiple inquiries.
If you go around tire kicking to everyone, your credibility drops. Lenders talk, finance professionals talk and how your request has been packaged and submitted matters in a big way. Not all finance professionals are created equal. Many call themselves facilitators, brokers, or consultants – but some have no idea what they are doing, and, in our experience, many have ruined the opportunity for an otherwise good company to receive favorable financing. It’s a big risk when you engage the wrong one, or more than one at the same time.
Applying to multiple lenders is a waste of time.
It's important to remember that all lenders are pulling the same reports, reviewing the financial statements and the management team the same way, so applying to multiple lenders or using multiple brokers at once is a waste of time.
The deal you are offered is based on your credit profile, business history, and numerous other factors.
In the world of finance, the business is completely analyzed, and the information is used, to determine whether you are an acceptable risk for the lender. Lenders look at the character of the principal or team operating the company seeking the loan, as well. Since there are more companies seeking capital than there are lenders willing to lend their money out, lenders are very selective with whom they offer financing. They don't want to waste their time on people who will shop around constantly, or who have not been able to simply commit to the process with one finance professional or lender. It reflects poorly on them as business owners, and how they manage their expectations. The adage “how you do anything is how you do everything” is very relevant when it comes to the process and how a business owner respects that process and the individuals who are there to help them. This isn’t like going from dealership to dealership and pitting one salesperson against another to grind down the price of a car. You will hurt your chances by playing games with a good finance professional or lender, so doing this when seeking capital for your business puts you in jeopardy of losing a really good lender. They won’t tolerate the behavior.
Lenders are in the business of making money.
This is no surprise, so you must understand that when a lender is performing their analysis, they are focusing on the strength of the company, how the story is told and if they like it enough to want to do business with you. Most business owners don’t look at it as a partnership, but they absolutely are your financial partner and they want to see you succeed, because they want to make sure that you can pay back your loan. They will support as best they can to ensure they are repaid, but they also don’t want to get into business with someone who doesn’t understand how this works and plays games while seeking capital. Lenders seek the support and counsel of partners like The UnBankers because we position our clients in a way that positively reinforces the strength of these companies and entices the lenders to take a chance on them. Having the right professional in your corner is vital, and when it works well, the lenders are very pleased.
There is no room for games.
Many business owners think that they can play multiple sides and hedge their bets. This is not a smart move, and the only ones they are hurting are themselves.
No one likes their time wasted, and we all may think that the lenders have lots of money and they calculate wasted time into their formula, but that’s exactly why good packages can get turned down or the cost of money can sometimes be affected – because of people who try to play a game where they do not know all the rules. The golden rule still stands, the lender has the gold, so they make the rules and if you mess with that, it will only affect you.
Tire kickers are only hurting themselves.
Having a good finance professional who helps to secure the financing is vital. We will ensure you get the best deal for your situation. We reinforce that fact that it doesn’t benefit us to get you more expensive money. We will always try to get you the best options, as those usually make it far easier for you to accept the lenders’ offer in the first place.
The truth is that all lenders use the same underwriting criteria: industry, years in business, annual revenue generated, net earnings reported, assets, key management strength, forward looking financial projections, business model and growth strategy. If you do not fit certain lending criteria for a specific lender, we continue with secondary options until the most suitable and interested lender presents an offer to finance.
Conclusion
You may have read some of these points before in other articles regarding capital, but I hope this one has given you a fresh perspective. Engaging and sticking with one finance professional is key and should be taken very seriously. We remain committed and available to work with like-minded business owners with integrity.