See How Much You Qualify For
Qualifications: In business for at least 9 months with at least $120K in sales over the past 9-12 months
By David Leibowitz
I’ve always regarded small- and mid-sized businesses as the growth engine that fuels the country’s economy. And access to capital, in turn, is the fuel that enables the growth of those businesses. Without those businesses, the economy will stagnate and die; and without access to funding, those businesses can’t perform their proper role as the backbone of economic stability throughout the country.
At some point in its development – often at several points – every business arrives at a moment where capital is required: It might be to take advantage of an incredible opportunity to expand – to acquire a new location, employ new staff, purchase equipment or inventory, undertake a new marketing campaign, or prepare to execute on a lucrative new contract; it might be to keep up with the competition or with new developments in the industry; or it might be to resolve a sudden crisis, or avoid one that’s looming, or to manage the cashflow pressures that come with growth or seasonal slow periods.
In those circumstances the source of the required funding, and the relationship you have with the lender providing it, is often more important than the mere fact of the availability of that funding. As a business owner, you will often be faced with choices as to where to go for the capital you need, and who to get it from. That choice is enormously important. Here are some insights which I hope will help you in considering that choice, when those moments arrive for you and your business.
When considering your options, and choosing the right financial partner for your business, what are some of the most important factors that you want to think about? Price is obviously important, but it would be wrong to think of that as the only consideration that matters – or even as the most important one. As in any other industry, the absolute lowest price is often provided at the expense of other things that are, in the end, even more important: Trust, service, and flexibility – to name just a few.
If the financial crisis of the mid-2000’s taught us anything, it’s that a big, well-known logo and a long history are absolutely no guarantee of integrity or trustworthiness. Some of the most established financial institutions in the world were at the very center of the sort of behavior that drove that crisis, and that left so much damage in its wake.
Just about every company promises integrity. Almost all financial institutions and business lenders tell you that they are trustworthy. But that doesn’t mean much. Instead, what has always been important to me is to examine what people who have dealt with them say about their experience. Do their customers trust them? If they do – and if the vast majority of the public feedback from those customers paints a picture of the kind of financial partner you would want to deal with in your business, then that’s an excellent start.
Next, and perhaps most importantly – what is your own experience in dealing with them? How do they treat you? In this regard, there are some steps you can take to figure that out – before you’ve committed to any relationship:
- Ask them hard questions, even if that feels uncomfortable. And see how they respond. Do they get defensive? Or aggressive? Or do they value the opportunity to be communicating with someone who is thoughtful and thorough in their exploration of their business options, and do they welcome the chance to have a meaningful conversation with you about those options?
- Ask them why you should trust them – directly. Do they answer by simply talking about the price? Do they answer by denigrating their competition? Or do they, instead, acknowledge how important a question that is – and offer you practical, constructive ways to assess that with reference to them? Do they invite you to seek out the views of other customers, and invite you to measure them by the way in which they answer your questions and offer their advice to you?
- Perhaps most importantly, do you get the sense that they are simply trying to “sell you” on what they have to offer – or do you instead get the feeling that they’re truly interested to understand your needs and circumstances, so that they can help you figure out whether what they have to offer is really a good fit for your business?
As with issues of trust, every financial institution or lender promises extraordinary levels of service. As you well know, very few of them actually deliver on that promise. And, as with issues of trust, it’s important for you to seek out the public views of other clients on the question of service – to see what those clients think of their experiences in that regard.
In the end though, the very best way to assess the service levels of a potential financial partner, is to experience them for yourself. And in that regard, here are a few indicators that I’ve come to rely on when I make that assessment:
- How easy is it to get hold of them? Does their marketing material and website seem to discourage direct telephone contact, or is it very easy to make that call?
- When you do make that call, is there an endless process of telephone-tree selection before you can actually speak to a live person? And when you do speak to that person, is it possible to find the same person you dealt with before, or is it clear that you keep getting through to a call center where you’re obviously just another number on a production-line?
- During your conversations with the company’s representative:
- Do they actually listen to your questions? Or are they simply running through a rehearsed script?
- Do they seem genuinely interested to understand your needs and circumstances, and what it is that you’re looking for?
- Do they invite and welcome your questions, and do they answer them directly – or do they make you feel awkward or uninformed when you ask?
- Do they appear to understand the fact that the most important thing is whether their product will work to benefit your business, or do they seem far more interested in figuring out whether it will benefit their own business?
- Are they full of promises that sound just a little too good to be true? Or are they prepared to give you expectations which sound more realistic – even if they don’t quite match your highest hopes and wishes?
- Do they do what they say they will do – or do they promise the world and then deliver something far different?
- Are they transparent – do they take the time to ensure that you fully understand the process, and do they explain your options to you clearly?
- When they present their offering to you, do they take the time to understand your reaction to it, and are they interested to try and ensure that it meets your requirements – or do they adopt a “take-it-or-leave-it” approach?
- Do they pressure you to make a decision, or are they sympathetic to the fact that it’s a big decision in the life of your business, and one which you need to be sure you’re making correctly?
- Are they responsive when you reach out to them, and do they always treat you with the respect that you deserve?
- Is their process and documentation simple and efficient, or very complicated and cumbersome? How long does the entire process take – and were they accurate about their estimates in that regard?
- If you have already done business with them before, did they “forget” about you once the business was concluded – or did they go to some lengths to stay in contact and make sure that your on-going needs were met?
- And, very importantly, how did they react and behave when things didn’t progress exactly as planned – when the process hit a snag or your business experienced a bump in the road? Were they accommodating and respectful, and truly interested in helping? Or were they aggressive and demanding in those circumstances? In other words, did they still behave like true partners when the chips were down?
Many people make the mistake of thinking that, because all money is the same, all loans are the same and all lenders are the same. Nothing could be further from the truth. A loan, and a lender, that fits your business needs perfectly today, might be completely wrong when those business needs and circumstances change in the future. For this reason, the flexibility of a specific lender, and of the product that they’re offering, is vitally important. Once again, these are some of the questions I ask in order to help me measure this issue:
- Do they appear to offer a single, one-size-fits-all funding product or loan? Or do they have the flexibility to adjust their offering to suit your specific needs and circumstances?
- Is there an opportunity to return for additional capital during the course of the initial term, if your circumstances require it – or are you stuck with the product you take today, until it’s paid in full?
- As your business grows and achieves additional success, are they willing to take that into account and improve their offering to you in consideration for that improved success?
- And similarly, as your relationship with them deepens and you develop a track record of good performance with them, does their offering and willingness to assist you improve accordingly – and does their process for providing you with additional funding become far simpler and more efficient?
The moments in your business when circumstances justify the need for additional capital are inevitable. If you’re lucky and successful, those moments will arise more than once, and will be related to opportunity, growth and expansion.
When those moments arise, choosing the right financial partner to provide you with that capital will often be at least as important as the terms of the financing they provide. That choice needs to be made carefully and thoughtfully – and after exploring some of the options and variables that are on offer. I hope that the thoughts I’ve detailed above provide you with some of the tools you’ll find useful in making that choice.
There’s more where this came from! If you enjoyed this chapter, download our FREE ebook, Mulligan Funding’s Ultimate Guide to Business Relationships, to access 9 additional chapters jam packed with practical tips and guidelines to maximize your business relationships.
The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.