Does your lender report to the credit bureaus?
Many small business owners don’t realize there can be major differences between online lenders and a business loan – even when the rates look exactly the same.
So, you have a loan offer from two lenders. The offers are fairly similar in the amount they’re willing to loan and their rates. But what you may not know is that one lender doesn’t report your loan to the business credit bureau; the other lender reports your loan to business credit bureaus. Is there an obvious choice?
Although there might be times when a business owner would choose a lender that doesn’t report to the credit bureaus, that may not be the best choice. Even if that loan is slightly more expensive than other options now, it may be cheaper for business in the long run. Let me explain why…
It might not make a difference with respect to this particular loan, but it could matter if your future business goals include pursuing another loan down the road. If you take a loan from an institution that reports to the business credit bureaus, and if you make timely payments, then these payments should help build your business credit profile, which in turn should lead to better offers if you apply for a loan again in the future. If your lender doesn’t report to the business credit bureaus, you may be building a good customer relationship with that specific lender, but you’re not doing anything to build a strong business credit profile, which is what other lenders will examine when assessing your application. OnDeck reports to three of the major business credit bureaus—Experian, Equifax, and Paynet—so any future lender can see your good business credit profile if you make timely payments and pay down the loan in full.
If building a strong business credit profile is important to you (which it should be), any time you borrow, make sure your good credit behavior is reported the appropriate business credit bureau.
1.What do I need the extra capital for?
2.How much money am I looking for?
3.What does my credit profile look like?
4.How quickly do I need the funds?
Ask Your Lender:
1.Do you lend to businesses in my industry?
2.What are the interest rates and the total cost?
3.What will my payment schedule be?
4.When will my first payment be due?
5.How do I make the periodic payments?
6.How long with the loan application process take?
7.What is your Better Business Bureau (BBB) rating?
8.May I speak to a few of your current and past customers?
9.Do you report my payment history to the appropriate business credit bureaus?
Asking these questions will help you find the right loan to meet your business needs.
Small businesses have more financing options today than ever before, yet navigating the maze of loan types and lenders can make it challenging to choose the right loan and the right lender for your business. The days when the bank was the one-stop-shop for small business loans are over. Meaning, business owners need to be savvier about evaluating their loan options. Before you get a small business loan, there are 14 questions you should ask—four you need to ask yourself and 10 you need to ask your potential lender.