When you’re running a small business, time is money, and both factors are always at the forefront of your mind. Worrying about finding the right lender when you need financing should not cause stress or waste your time. That’s where loan aggregators come in.
If you haven’t used one before or want to know how to evaluate them so you can be sure you’re making the right decision, this guide will help. You’ll learn everything from what they are and why they match borrowers with lenders to the specific advantages and disadvantages of using them.
What is a Loan Aggregator?
Loan aggregators are companies that match borrowers with lenders based on the borrower’s needs and the lender’s requirements. Loan aggregators build relationships with traditional lenders like large banks that provide large sums of money, and alternative lenders that can be faster and more flexible with approvals.
Because of these relationships, they already know what the interest rates will be at each, the qualifications (like credit scores, deposits, and collateral that will be required), and the types of borrowers each lender is currently looking for. This is how they can match a borrower with the right partner, which saves the borrower time and potentially money, as the borrower may be able to get a better rate by discovering new lenders they didn’t know about.
Some aggregators round up a list of their top lending picks for a business owner so they can compare the differences between lenders and make a decision on their own. This is popular both for businesses and consumer lending products like mortgages.
Other business loan marketplaces, like us here at SmallBusinessLoans, ask you a few questions to better learn about your business needs before matching you with the best financing provider. Every business is unique and by taking the time to know a little bit about your business, a platform/marketplace can better match you with a lender that has the right expertise for your business needs. This way, you have a better chance of getting what you really need. Those are only some of the reasons why savvy borrowers use loan aggregators.
The Benefits of Using a Loan Aggregator
The benefits of using a loan aggregator include:
- Saving time by not talking to lenders that are unlikely to provide you with a loan as you are not their ideal borrower.
- Not overpaying interest rates as the loan aggregator knows the current market and who is offering fair rates based on your situation.
- Knowing which lenders offer customized and niche types of loans to help you get the correct type of financing to meet your needs, including payback periods, flexible spending, and curtailments that can be waived.
- By reducing the number of hard inquiries made because you only talk to lenders that are likely to lend to you, you can reduce the amount of inquiries that get reported on your credit report.
- The speed at which you can get approved, especially if you choose an alternative lender match.
- Accessing lesser known but still trustworthy lenders to explore the full range of your options.
- Some loan aggregators work on commission, so if they cannot get a loan that meets both your and the lender’s needs, they won’t get paid. This makes them work harder for you!
An aggregator can be a source of general and niche loan information. If you’re evaluating your loan on your own, you’ll need to research what type of loan would work for your needs and may not discover customized financing solutions. We’ll stick with business loans since that is what we specialize in.
You may be applying for a traditional small business loan, but you only need it for immediate expenses because accounts receivable are late. We can match you with a short-term business loan or working capital loan that are likely better fits to meet your needs.
The short-term business loan can be paid back faster than a traditional bank loan, so there are less interest payments to be made and the debt can be wiped off your business credit score more quickly. Similarly, working capital loans are meant to cover your day-to-day operational expenses like payroll, utilities, and rent.
So how do you find a loan aggregator and lending partner? Check out our tips below.
Tips to Find the Right Loan Aggregator and Lending Partner
Choosing the right lending partner is easier with a loan aggregator because they take the guesswork out of which lenders have a product that works for you. This includes different types of SBA loans and their providers, alternative lenders, big banks, and more.
The first step in finding the right partner is to ask yourself these questions:
- What does your business need funding for?
- How quickly do you need access to these funds?
- Can you afford daily, weekly, or monthly payments?
- What are your business goals for the next quarter and next year?
- When do you need the debt to clear from your books to free up cash flow?
Knowing what your business needs funding for will help the loan aggregator narrow down its list to provide you with the best business loan options. If a natural disaster strikes or you lose your inventory and need an emergency business loan, they’ll know which lenders are the best match for your profile.
When you know what you can afford payment-wise based on your accounts receivable and cash flow, the loan aggregator can narrow down the lenders to match their payment terms to your business’s revenue. And when it comes to your goals, some lenders may be more flexible on interest rates and terms when they see that you plan to expand and will be taking out more business loans in the future. Depending on the specific marketplace, if your loan aggregator knows all of this in advance, they can find you a long-term partner vs. a single one-time loan.
If you’re in the market for a business loan and want to save time and money with the right marketplace, we’re here to help. At SmallBusinessLoans, we are committed to supporting the financial well-being of small businesses like yours. Our mission is to provide tailored financing solutions that meet your unique working capital needs.
Through our network of trusted lending partners, you can gain access to up to $500,000 in capital and get approved in as little as 24 hours. We understand the challenges you face and are here to match you with the right financing for your unique needs. Click here to discover your top matches today.
SmallBusinessLoans does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal and accounting advisors.
