Just as with all types of products and services, it is wise to take time to compare business loans before making a decision about which one you want to proceed with. This way, you can get the loan with the best terms based on the conditions of your company.
Many business owners usually settle for comparing the cost of the loan from a couple of lenders. Unfortunately, this can easily lead to problems at a later stage when the self-employed person does not have control over what the repayment terms look like and if these were really the most advantageous based on the company’s situation for example.
Differences in the application process of the loan
We help companies find out the difference between loans and find the most advantageous solution for their company’s situation. In the text below, we go through a number of aspects to consider when comparing corporate loans and about which we also advise our clients.
What many often overlook is that the application process looks different among different lenders. Some differentiate themselves through a smooth application process that takes place online with quick answers, while other more traditional lenders may work more offline.
In other words, one should also compare the application process to corporate loans, since the difference in time spent can be significant and hence also a difference in costs and liquidity. Other aspects to consider have to do with the complexity of the application.
Time aspects – How long does it take?
The time aspects that one should compare when applying for corporate loans have primarily to do with the time it takes until a decision is made and the time it takes until the loan is paid to one’s company.
One rule of thumb is that the larger the loan your company seeks, the longer it will take for the lender to make a decision on it. This has to do with the fact that lenders often have standardized decision models on smaller corporate loans, while larger loans have to go through a credit committee (ie a committee that makes decisions internally on loans paid to specific companies).
Despite this rule of thumb, you also see big differences between different lenders. Some make a decision right when your application is submitted, while others may take a couple of weeks before a decision is made. Here, one should take into account when the company needs access to the capital and among which lenders this is possible.
Another aspect to keep in mind when applying for corporate loans is how quickly the loan is paid off after a decision is made. Just as in the decision-making process, it differs between lenders when they pay off the loan. However, the difference is often smaller (1-7 days), which is why it plays a bigger role for companies that want to improve their liquidity with the loan.
Complexity – How complicated is the application?
When applying for and comparing corporate loans, you should also take into account the complexity of an application. This is especially important for small and medium-sized companies, as they often have a shortage of time as self-employed and simply cannot afford to enter into a process that means that they spend less time on actual business.
One can compare the complexity of applying for a corporate loan by looking at the amount of documents a lender may require to make a decision. Most lenders ask for access to the company’s latest financial statements.
Some ask that they also have access to a budget for the coming year and how this will be affected if the loan is granted. Other types of documents that may be required have to do with order intake, invoicing, and payment habits among customers.
A further aspect to make sure is whether the lenders want to meet during a meeting to review the loan application and what the company should use the loan for or if the entire process is done online. Obviously, applications made entirely online require less time by the self-employed person.
How we work with our customers
We help our clients take in offers of corporate loans from several lenders at the same time and summarize them in a clear comparison. In the decision-making process, we are there to support and answer any questions that may arise about the loan terms and which offer is best for the specific company.
We have helped a number of companies through successful applications for corporate loans and are passionate about finding the best solution for each company.