The #1 Feature of a Business Loan is…
There are a variety of reasons small businesses choose to take out loans. Luckily, each lender offers unique features, so there isn’t a one-size-fits-all package when it comes to business loans. Certain features may seem enticing to one business, while another chooses to steer clear of it.
Here are a few examples of features and reasons why they may or may not be important to businesses:
- Personal Collateral. For businesses that are either just starting up, or owners without any personal collateral to offer, finding an unsecured loan is a priority. While unsecured loans are possible to find, they typically come with high interest rates. Those with business and personal collateral to offer, may not be as concerned with this feature.
- Fast Funding. Companies that need to pay employees or vendors ASAP but are low on cash will want to secure a loan in a matter of days. There are a handful of lenders who can provide this service, but it may come at the cost of high interest rates or collateral.
- Low Rates. Those with business collateral and good credit history are able to make low interest rates their number one priority. Aiming for the lowest rates possible seems like it should be a given for every business, but new businesses or businesses with no credit history will never be able to secure a loan with low interest rates (such as loans offered by banks).
- Honest Application Requirements. Many business owners don’t have time to sit and personally visit with bankers, and they don’t want their credit score ran each time they try for a loan. These types of people are looking for a lender with upfront borrowing requirements that they can see before even applying.
We wish we could show each business owner an individualized ranking of banks and alternative lenders that is right for them. But we knew that we had to give an overall ranking of which lenders offer the best service.
To find out what was the most important features of a business loan overall, we surveyed over 3,000 people. Here’s what we found:
- 47% of people say that getting the lowest APR / interest rates is top priority when taking out a business loan.
- 19% of people said transparent requirements and knowing eligibility before applying was most important to them.
- 18% of people said not using personal collateral was most important to them.
- 14% of people said fast access to cash would be most important when taking out a business loan.
Using these results, we created a ranking system for business loan providers. This gives everyone a general idea of which lenders they should work with. Just remember that we display tons of information about these companies, so business owners can individually select the loan that is right for them.