What to look for in a business lender: 7 factors to consider

Nicki Ghazi

Monday, 23 March 2020

No one wants to lose sleep over how they'll pay back suppliers or put out tomorrow’s fire, let alone see their next phase of business growth.

That’s why entrepreneurs and business owners turn to finance—to invest in their vision, deal with fluctuations in revenue, pay off debt and streamline processes.

But choosing the right lender (along with the right type of finance) isn’t so straightforward. You want a lender who’ll not only give you a great rate but be as invested in your business as you are. Who do you trust to do that?
Here are 7 green flags to look out for when considering a business loan lender, to streamline your comparison process and ensure you wind up with a great deal.

1. Flexibility

When you come across a potential lender, ask yourself: do they take the time to understand my vision, and how my business operates, or am I just a number in their system? Can I customise my finance solution or are there products one-size-fits-all? Will their offering even solve my problem?

Check whether repayments, loans terms and features are flexible. Can you choose a fixed or variable rate? Are repayment terms up for negotiation? Is the facility contract transparent? These factors can end up making a massive difference to what you end up paying for, and more importantly, getting out of your loan.

But, no matter how much research you do, you can’t be expected to know everything in hindsight. For your peace of mind, our product specialists are available to answer your questions and alert you to factors you may never have considered. With 100+ years of experience combined and access to 80+ lenders, they know their stuff.

2. An application process you can deal with

Are you an established business with a stellar credit history? You’ll have a higher chance at getting past stringent criteria set by big banks. If you’re a smaller business or just post-startup, non-bank lenders could be your best bet.

Either way, you’ll want to consider how easy (or not so easy) the application process is, because the cost of lost time and stress can be onerous for you and your business, to say the least.

Banks are notorious for having long application processes—it can take several weeks or even months to get a potential approval. In fact, 29% of SMEs who secure funds through banks say their business was negatively affected because of the application process taking so long.

The good news: unsecured business loan lenders may be able to speed up the process of getting finance approved, due to the nature of unsecured funding. At Valiant, our clients receive finance in as little as 24 hours.

3. Exceptional customer service

Great customer service goes a long way in any industry. Finance is no exception. In fact, you’re going to be dealing with your lender for years, so if there are any hiccups now, consider how a long-term relationship will hold up.

Do you get a good feeling about this lender? Do they take the time to get to know your business and do they seem genuinely invested? How quickly are your questions and concerns clarified? Your dealings should be smooth-sailing, especially during early days.

Being able to easily contact and communicate with your lender via phone, email and live chat is also a good sign.

4. Great interest rates

Competition is growing and there are hundreds of options out there these days. Don’t settle for an average interest rate. Why would you?

To give you some context, the base rate for business finance (according to National Australia bank) is currently 8.77%, and keep in mind, rates will vary depending on whether your loan is secured or unsecured.

The key to finding a great deal on business finance is shopping around. It’s also important to consider how much you’re willing to pay over the course of your loan, and ensure you’re comfortable with meeting your chosen repayments.

No time? Let us help by finding a tailored finance solution for your business, based on products from 80+ lenders.

5. Lots of choice

A large product range means more choice, and better suited products. Consider the purpose of your loan and what you want to get out of it. Your lender should be able to point you in the right direction.

You might want to ask about the following business loan features:

  • Redraw facilities
  • Ability to make extra repayments
  • Flexibility of repayments i.e. ability to pay weekly, fortnightly or monthly

Also consider whether you want:

  • Secured or unsecured finance
  • A face-to-face branch (as opposed to your lender being online only)
  • Fixed or variable interest rates

Note that in the nonbank world, term loans and flexible products have fixed interest rates, as lenders require a regular return on their investment in order to best manage their portfolio and funders’ expectations.

6. Familiarity, but not always

Being familiar with your lender can be comforting—even better if you’ve dealt with them before or know someone who has great things to say.

But familiarity isn’t the be all and end all. So many non-bank lenders have emerged, offering solutions that traditional banks can’t. And, being loyal to one bank or lender can end up costing you much more than needed.

Though non-bank lenders are often privately owned, they are still regulated by ASIC so they are a viable option. For some businesses, they may be the only option. If you want the best possible rate, shopping around is the way to go.

Rates and offerings change regularly, so comparing your options (for a new loan) or considering refinancing an existing one is an effective way to keep finance costs down.

7. Happy customers

Learn through the people who know your lender best! Websites like Trustpilot and Word of Mouth are great ways to find honest reviews from customers about a company, and even a quick Google search should give you a better idea. Deep dive, ask around, and find out as much as you can—you can’t beat social proof!

Visit social media pages to take a look at what customers are saying and how engaged they are with the business. High ratings and positive customer reviews mean they must be doing something right.

Make your call, or delegate!

At the end of the day, we do what’s best for us based on the information we have. To be truly confident in your decision, seek out a lending expert for free and take advantage of our knowledge. Your time is better spent driving business initiatives you actually want to be a part of.

Valiant is easy, free and won’t hurt your credit. Give our free comparison tool a whirl →


Nicki is our Senior Working Capital Manager. She works with a team of talented product specialists, leveraging 25 years combined experience to help Aussie businesses find tailored finance solutions.

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