Why Loan Pricing Should Not Be the Priority

When your bank asks you to find alternative financing, it can be tempting to choose the lender offering the lowest interest rate. While this may seem like the best deal, focusing solely on price could lead you to overlook important factors that directly impact your business’s success.

A low-interest loan may come with restrictions or a loan structure that doesn’t fully meet your needs. It’s crucial to consider more than just the interest rate when choosing a lender. Here are key factors that can affect your business:

• Access to Decision-Makers: Will you be able to speak directly with the people who can make critical decisions on your behalf when needed?
• Flexibility for Growth: Does the lender offer the ability to access additional capital or side loans as your business expands or faces unexpected challenges?
• Support During Difficult Times: Will the lender be there to help if your business hits a rough patch, or will they quickly pull the plug?
• Business-Friendly Terms: Do the lender’s covenants allow you to run your business the way you want or do they impose restrictive terms that could hinder growth?
• Fees and Penalties: Will you face additional fees or higher rates if you break covenants or if your business needs restructuring?

Ultimately, the “lowest price” lender may not provide the best value or the most flexible terms for your business. It’s important to find a lender that offers the right structure, access to capital, and support—one that understands your needs and will grow with your business. Don’t just focus on interest rates; the best lender is the one that helps your business thrive. “Lowest cost” doesn’t tell the whole story and often times has a very bad ending.

About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.

As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.

If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or mhafner@celticcapital.com, or visit us at www.celticcapital.com.