Renewal of an existing loan is a popular option for small business owners who have ongoing funding needs. Several factors will determine whether you renew your loan with the same lender. Here are some options and benefits to consider before you take out another business loan from the same lender.
Renewing your small business loan with the same lender
Renewal of your small business loan with the same lender has many benefits. These are just a few of the benefits:
Established Relationship
You can’t expect to have the same positive rapport with a lender that you had with your previous lender after months or even years of working together. You can expect the same experience if the lending advisor that facilitated your small-business loan transaction was easy. You can renew your small business loan with the same lender, and you will be able to work with someone you know and trust. You don’t have to spend time again explaining your business and financing needs. You’ll be able to save time, and you will have greater peace of mind during the renewal process.
No Hard Credit Pull
You can expect a lender to run a credit report on you before they approve your loan. The lender wants to know that you will be able to repay the loan. Hard pulls are when someone pulls your entire credit report. When you renew your loan with a new lender you may see a mark on your credit history as a result. When you remain with the same lender only a soft credit check is needed to verify your information. Your credit score will not be affected.
Favorable Terms of Loan
You can expect some good loan terms if you’ve been a great borrower for your current lender. To be a responsible lender, you must make all your payments on time. To the fullest extent. If you are unable to pay these expenses on time, contact your lender as soon as possible. Being a good lender can also help you get better loan terms. Renewal of your small business loan is a win for you and the lender.
Consider Other Options
Renewal of your small business loan by the same lender has many benefits. There are some situations in which you might want to choose a different lender.
If your credit score has improved since you last applied for a loan, you may be eligible to receive a lower interest rate. You will probably get the same terms if you renew your loan with the same lender. This is not a big deal. If your credit score or financial situation has improved since you began working with the lender, it might be worth exploring your options to find better terms.
Concurrent funding is a good option when you can get the same lender to do it. Concurrent funding allows the borrower to get approved for a larger amount before paying off the original loan. Concurrent funding is usually done in parallel with the original loan, and gives the borrower quick access to additional capital. Concurrent funding approval is not guaranteed. However, the benefits include faster processing times and no credit checks.
You may have difficulty repaying your debt. Small business owners can find it difficult to overcome cash-flow challenges. Renewal of your small business loan may not be a good idea if you are struggling to pay for day-to-day expenses. You might not be approved for a loan renewal if your finances are a problem. Even if you are approved, it doesn’t necessarily mean that this is the best option for you. It might be better to look into refinancing through either your current lender, or a new one.
You can see that renewing your loan for a small business with the same lender is a wise choice. It is important to weigh your options and assess the financial health of your company before making a decision.
