Crest Hill Capital

First time working with an alternative lender? Here are 5 questions you need to ask.

Alternative lending institutions are mainstreaming very rapidly – suddenly, the Internet is awash with information about them, friends, family, or acquaintances are talking about them, and positive impact stories are circulating in traditional media. Naturally, any small business owner would like to test the waters – after all, every entrepreneur out there could do with a liquidity boost!

But before stepping into new partnerships, it is good to know what you will be dealing with. I have put together this quick list of top 5 questions that first-time clients must ask (and find satisfactory answers for) while looking for alternative funding –

Q 1. Which lender matches my exact needs?

There are many alt-lenders, and an equal number of funding offers floating in the market. You have to find the lender and the offer that fits your business’s credit requirements. For example, I found Cresthill Capital an excellent lender to approach for flexible merchant cash advances. An MCA is a quick and easy way to get credit with highly flexible repayment timelines.

Q 2. Is this lending company trustworthy?

In matters of money, trust is paramount. I would recommend you dig into the reputation and reviews of any lenders you shortlist before you close the deal. There are many online forums to find reviews, but I would also suggest that you chat with some past clients to get to know first-hand experiences. In my experience, it is better to deal with lenders who are familiar with your industry and has dealt with businesses similar to yours.

Q 3. Do I meet the eligibility requirements?

An MCA of $6000 would have very different eligibility criteria compared to a more significant funding amount of say $100,000. Before you spend too much time shortlisting lenders and researching their past, it makes sense to find out their qualification requirements first.

Q 4. What are the costs and penalties involved? Can I renegotiate?

You must be extremely clear while checking the terms of the offer. The first thing to find out is the TOTAL cost of the deal. For example, in merchant cash advances, several components matter, such as your APR rate, the duration of the offer, and the payback percentage. However, other financing options, such as an equipment financing deal or a line of credit, would have different terms. You must understand the complete cost of the credit offer, including services charges and other fees.

You must find out what the penalties are in case you default on payments or in case you want to pre-pay the debt. Also, it makes sense to understand whether the lender has a policy for renegotiating the offer in case things become tough.

Q 5. What other services does the lender provide? Do they help their client's businesses in different ways?

Most lenders also help their customers with add on services. This could be in the form of financial counseling, business financial planning, or similar relevant services. In the long run, it is useful to tie-up with a lender who offers support and guidance. I have absolutely no Cresthill Capital complaints in this regard! Over the years, they have become my go-to financial advisers rather than just a credit agency.

The Bottom Line

A financing deal is strictly business, so be prepared to ask the right questions and negotiate hard to get the funding your business needs. However, it is equally essential for your business growth to develop a good working partnership with your lender. My advice would be to not rush into a deal - spend extra time looking for the right company and the perfect offer before you sign up.