It Pays to Look Beyond the Interest Rate to Find the Best Lender for Your Business Needs
For whatever reason, (broken covenants, losses) your bank asks you to find alternative financing for your business. The bank has also probably referred you to a few asset based lenders for that financing and while it’s tempting to choose the lowest-price provider, that might not truly be in your best interest. For what appears to be the lowest price, may not really be the best value or may not provide you with a loan structure or enough working capital to run your business. Comparing lenders based solely, or mainly, on the interest rates quoted, is not enough. There are many other factors to consider including,
Which lender will:
- Provide you with access to the decision-makers, especially if you need them to make a decision on your behalf?
- Provide over-advances or side loans when you need them?
- Grow with you and help you take advantage of business opportunities?
- Be there if your business gets into trouble?
- Impose covenants that make it difficult to run your business the way you want to run it or hinder your ability to grow your business?
- Assess fees or increase rates if covenants are broken?
- Be open to restructuring your credit facility or just ask you to leave if things get tough?
AND, you may find that some of the lower-cost lenders have oppressive restrictions or that they require you to come up with more money up front. For example,
A lender may require:
- A certain amount of excess availability (a dollar amount that must be kept available after funding)
- Payables brought down to 60 days
- An opinion letter from an outside attorney (that can cost anywhere from $15,000 to $25,000)
- A cap on your salary or a condition that you cannot receive other forms of compensation for the duration of your contract
- The pay-off of an old, low-cost debt
It pays to look beyond an interest rate comparison to find an asset based lender who best meets your business needs because “lowest price” really doesn’t tell the whole story.
About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.
As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.