It is strongly suggested that business borrowers avoid any form of an online business financing application. This business loan article will provide an overview of how and why to avoid the usual online business finance application trap.
Business owners and commercial borrowers will consistently find an almost limitless supply of Internet business finance sites. Most business loan websites will include some version of an online commercial mortgage or business cash advance application. Here is a four-step process for avoiding the unwise use of online business loan applications:
- Start by avoiding the initial temptation to submit a commercial loan application online. It does appear to be convenient for a business borrower to apply for business financing online. Perhaps some business owners are attracted to the anonymous nature of the online business finance application because they have been previously annoyed by sales tactics and evasive answers in personal business loan discussions.
Many commercial lenders have contributed to the pervasiveness of online business finance applications in large part because they are fearful of losing some competitive advantage by not having this capability. However, in attempting to match their competition, business lenders and commercial loan brokers are sacrificing the best interests of their commercial borrower clients by facilitating the online business loan application approach.
- Understand why it is essential to avoid an online business finance application. Submitting a commercial loan application via a business finance website is equivalent to blindly sending a resume to a company seeking employment without any prior discussions or research. What makes an online business loan application even more risky and inadvisable than the anonymous resume example is the usual inclusion of tax identification numbers and other sensitive business data on a commercial loan application document.
There are several key problems associated with an online business finance application. First, there are always potential security breaches during transmission (as well as before and after transmission). Second, there is a significant loss of control by the commercial borrower in the use of their social security number or business tax identification number for checking credit (since many online business finance application processes will result in checking credit before any personal conversations occur).
Third, most commercial loans are simply too complex to initiate by an oversimplified automated process. If we can use a brief sports analogy, starting the commercial mortgage loan or business cash advance process with an automated business loan application is tantamount to the kickoff of a football game occurring without any pre-game warm-ups, coaching pep talks or the traditional coin toss. The easy and convenient approach simply omits too many preliminary and essential steps.
- Replace an online business loan application process with a better approach. The simple and pragmatic solution to the business finance application dilemma is to insist on preliminary personal discussions with an experienced advisor before submitting any form of business loan application. A suitable and ethical commercial lender will not ask a commercial borrower to submit any commercial loan application until the borrower has completed a thorough discussion with the lender confirming that business financing is appropriate for a specific business situation.
Of course it should be anticipated that some commercial lenders and business loan brokers will attempt to minimize the potential problems associated with an online business finance application. Instead of dealing with such a business financing advisor, commercial borrowers should seek out one of the relatively few commercial loan advisors willing to emphasize a conversational and individualized approach to commercial financing for a business owner.
- Explore additional resources that will facilitate a better understanding of complex business finance issues. The Commercial Real Estate Mortgage Guide and The Working Capital Management Guide are two examples of business financing resources that will provide strategies and solutions for many problematic business loan circumstances.
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