How to Avoid the 3 Common Pitfalls of Borrowing money for the First Time

Entering into the business world can be overwhelming and that is not including the feeling of trying to find funding.

We work with a lot of business owners and even experienced owners can fall into these pitfalls.

Here are three pitfalls you want to avoid EVERY time you seek to borrow money.

Pitfall #1: Waiting Till the Day you Need the Money

Borrowing money takes time, there is no avoidance of collecting all the documents, talking with lenders, finding a good deal, and finalizing. It’s not a speedy process and you do NOT want to rush it.

If you try to rush this process you will pay more for the money. A broker looks for the right loan for the business but when it is a survival situation any money becomes good enough.

Solution:

Your business needs the right loan at the right price. Start searching BEFORE you need the funds to avoid this pitfall.

Pitfall #2: Not Shopping Around

This is more for business owners who aren’t utilizing a broker in this process.

The first deal offered might not be the best deal for you.

There are different stipulations, timetables, interest rates, prepayment penalties and more.

It’s never cut and dry, you must know and understand all the details of the loan offer and determine if it is the best option for you right now.

Brokers do this. Because they have so many connections between lenders, they can say “no but what about this?”

Solution:

Ask for different options and ask different lenders.

OR just hire a great broker.

Pitfall #3: Not Taking Time to Research Who you are Trying to Borrow From

Brokers find you the right lender with the right deal. To ensure you are working with good brokers and lenders, you must ask questions.

Starting with the broker look them up online. How are their reviews? Any testimonials? Ask them for references.

If you are working directly with a lender do the same thing. How is their online presence? What do people say about working with them? How many loans have they done?

Solution:

Research the brokers or lenders. Know who you are working with.

Working with the right people can improve your funding process dramatically.

Remember:

Borrowing money can help your business grow but start searching early, shop around and know who you are working with.

THEN you will have a stressless experience so you can focus on growing your business.

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