Last week we wrote about the merchant advance service – what is is, how it works, and a little history on the industry. Over the next couple posts we’ll add some tips on what to look for when you’re choosing a company to provide your small business loan alternative. Like any industry there are good guys and not-so-good guys. Do your homework.
Always check out the Company
Anyone can set up an impressive website and appear to be much larger and more credible than they really are. Check the local Better Business Bureau, ask for references, and make sure you talk to talk to existing customers in your local area.
Who’s behind the Company?
If it’s a big public company you’re usually pretty safe. Your $30,000 advance won’t break them. If it’s privately held, find out who the shareholders are. What’s their history? How long have they been in business? Who’s money are they using…their own, the banks, or a bunch of guys that ride motorcycles? Are they financially solid or will they be out of business in 6 months?
Is local important to you?
More and more businesses these days prefer to “keep it local”. If this is important to you make sure you’re picking a 100% Canadian owned and operated provider. Most of the larger merchant cash advance companies in Canada are based out of the US – not that there’s anything wrong with that – but if keeping it local is relevant, Go Canada.
Tip: If you’re not sure where you’re calling, ask a hockey related questions – like who scored the gold medal goal in Vancouver
Are you talking directly to the funder?
Make sure you’re talking to the people that a) make the final financing decisions and b) provide the cash. Many providers use third party re-sellers or “brokers” that are usually commission based, wear cheap suits, have bad hair and don’t care about your business – they just want to make the sale and move on to the next one. Third party brokers also drive the cost up – the fewer hands in the process the better rate you’ll get.
Your homework is almost complete – you’ve found a Company you feel comfortable with. They’re local, members in good standing with the Better Business Bureau and they’ve been in the financial services industry for decades. They do not wear cheap suits, they don’t have mullets and they have no experience in the manufacturing of cement shoes.
Before you spend any time gathering up the all the paperwork for the application you need to ask a couple more questions about how the repayment works. Got a few calls to make so we’ll cover this tomorrow.