Grow Your Business

How to Get the Most Out of Your Financing

Many business owners are so happy just to secure financing that they fail to negotiate better terms and rates. Time is money and a low financing rate costs less than a high one, especially long-term, so consider all of your options for finding the best rate and most flexible terms.

Alternative Lending Programs

Small Business Administration (SBA) loans issued by banks and non-bank institutions—peer lending groups and community-based organizations, for example—often offer longer terms for repayment and preferred rates. SBA loans are relatively large loans with flexible terms, but clear documentation is needed. Working with a motivated and experienced banker who has small business expertise is best for securing favorable terms and rates.

Supplier Financing

Vendor financing can be an attractive, low-cost option for established businesses with strong suppliers and significant purchasing power. Vendor financing may provide flexible payment terms, discounts for early payment and financing options to free up working capital. Purchasing scale and vendor credit may limit the total impact on working capital, but it can be a low cost option for many companies.

Co-investing

Most lenders want the business owner to have some “skin in the game” by requiring equity to close the deal. While traditional bank loans require a 25 percent to 30 percent cash down payment, SBA guaranteed loans can have a down payment as low as 10 percent. The payment can take the form of existing cash, retained earnings, stock, real estate or any other substantive item of value agreed to by you and your bankers. Lenders will feel the owner is sharing the risk with them and may be more willing to offer more favorable terms and rates.

Collateral

This is a highly liquid or saleable asset such as cash, investments, a house or a vehicle that is required by traditional bank loans in case of loan default. The use of collateral can improve the terms and rates of the loan, because the bank is essentially receiving a backup for re-payment.

Micro-lending

These are smaller loans underwritten by the SBA and a bank pool. While the size of micro-lending loans can be very limited, the terms are usually flexible. Business coaching and technical assistance are often part of the deal.

Government Programs

There are a variety of loan offerings administered on the federal, state and county level. For example, financing programs run by the U.S. Department of Agriculture can offer very flexible rates and terms if your business fits the requirements.

About SunTrust Business Owner Research: SunTrust surveys small business owners and advisors as part of its ongoing business seminars and symposiums. The small business owners attending these events include both SunTrust client and non-client business owners and are representative of the broad spectrum of businesses located in the SunTrust markets. The research cited in this report is extracted from these 5,425 small business owner surveys collected between 2007 and 2011.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

Related

Investment and Insurance Products:

Are Not FDIC or any other Government Agency Insured   Are Not Bank Guaranteed  May Lose Value 

© 2018 SunTrust Banks, Inc

equal housing logoSunTrust Bank is an Equal Housing Lender. Member FDIC

equal housing logoEqual Housing Lender. SunTrust Mortgage, Inc

SunTrust, SunTrust Mortgage, SunTrust PortfolioView, SunTrust Robinson Humphrey, SunTrust Premier Program, AMC Pinnacle, AMC Premier, Access 3, Signature Advantage Brokerage, Custom Choice Loan and SunTrust SummitView are federally registered service marks of SunTrust Banks, Inc. All other trademarks are the property of their respective owners.

Services provided by the following affiliates of SunTrust Banks, Inc.: Banking products and services are provided by SunTrust Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank, SunTrust Delaware Trust Company and SunTrust Banks Trust Company (Cayman) Limited. Securities, brokerage accounts and insurance (including annuities) are offered by SunTrust Investment Services, Inc., a SEC registered broker-dealer, member FINRA, SIPC, and a licensed insurance agency. Investment advisory services are offered by SunTrust Advisory Services, Inc., a SEC registered adviser. GFO Advisory Services, LLC is a SEC registered investment adviser that provides investment advisory services to a group of private investment funds and other non-investment advisory services to affiliates. Mortgage products and services are provided by SunTrust Mortgage, Inc.

SunTrust Mortgage, Inc. - NMLS #2915, 901 Semmes Avenue, Richmond, VA 23224, 1-800-634-7928. CA: licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, IL: Illinois Residential Mortgage Licensee #MB-989, Department of Financial and Professional Regulation, 100 W. Randolph, Suite 900, Chicago, IL 60601, 1-888-473-4858, MA: Mortgage Lender license #-ML-2915, NJ: Mortgage Banker License - New Jersey Department of Banking and Insurance, NY: Licensed Mortgage Banker—NYS Department of Financial Services, and RI: Rhode Island Licensed Lender.

"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of SunTrust Banks, Inc.: SunTrust Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.

SunTrust Private Wealth Management, International Wealth Management, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups and GenSpring are marketing names used by SunTrust Bank, SunTrust Banks Trust Company (Cayman) Limited, SunTrust Delaware Trust Company, SunTrust Investment Services, Inc., and SunTrust Advisory Services, Inc.

SunTrust Bank and its affiliates do not accept fiduciary responsibility for all banking and investment account types offered. Please consult with your SunTrust representative to determine whether SunTrust and its affiliates have agreed to accept fiduciary responsibility for your account(s) and if you have completed the documentation necessary to establish a fiduciary relationship with SunTrust Bank or an affiliate. Additional information regarding account types and important disclosures may be found at www.suntrust.com/investmentinfo.

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member FINRA and SIPC.