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It is important to keep in mind that Baker Boyer offers several types of loans depending on many factors. Some of the factors which will go towards determining how your loan is structured include:

• Creditworthiness — risk is always assessed when offering a loan. The more favorable the creditworthiness of the borrower, the better the terms.
• Length of time in business — those who have been in business for two years or more might be viewed as less risky because they can share historical financial and management performance. There are exceptions to this of course since loans may also be provided for startups. However, many startup loans have less favorable terms or more reporting requirements than those businesses which are more established while the startup builds up their creditworthiness
• Collateral requirements — when taking out certain types of loans, there is collateral attached to the loan. For example, a real estate loan or equipment loan is typically secured by the underlying asset. These loans tend to have more favorable terms than unsecured loans.
• Cash flow — your Business Advisor will analyze your business financials to ensure the loans they provide will be repaid in a timely manner. This will often mean a business owner will have to provide financial statements on a monthly, quarterly, or annual basis.
• Other debt — lenders will look at what other debt service requirements a business has before agreeing to provide an additional loan.

There are other factors that will impact loan terms but in general, these are the factors that will have the greatest impact on business loan terms.

Business Loans and Personal Guarantees

One of the requirements that many business owners do not consider is that nearly all business loans may need a personal guarantee. Lenders are risk-averse and wish to ensure that in the event the business defaults on the loan, they are not taking on any additional risk. Any business owner who has a greater than 20% stake in a business may be asked to personally to guarantee the loan will be repaid with their personal cash.

Why Loan Terms Matter for Your Business

It is important to be aware of all terms and conditions of the business loans you are considering. At Baker Boyer Bank, your Business Advisor is happy to explain all the terms and conditions of your loan and answer any questions you may have. Ensuring you can make timely payments is important but there are other important things to consider as well including:

• Sufficient to meet goals — when taking out a loan, it is important to ensure that the amount is sufficient to meet your goals. Failing to secure the right amount of financing could mean changing goals or having to obtain additional capital.
• Cash flow available — while the lender will verify whether they believe you have sufficient cash flow, it is important to keep in mind that you will have to budget your loan payments. Having an understanding of your cash flow fluctuations through the year can help you make better decisions. You can further your understanding of these fluctuations by preparing regular budget projections and reviewing them compared to your actual cash flow frequently throughout the year.
• Personal guarantees — when business loan terms require a personal guarantee, it is important you understand how the guarantee may impact your personal finances if the business is unable to make its payments. These are just a few of the reasons why it is important to have a firm understanding of the terms and conditions of your business loans.

Let Baker Boyer Help You Decide

Since every business has different financing requirements, from short-term cash needs to longer-term equipment or real estate financing, it is helpful to work with a team who will take the time to review those needs and help you make the right decision for your business.

Contact Baker Boyer today at (800) 234-7923 and speak with one of our Business Advisors and let us help you customize a financing package which best meets your needs.