5 Simple Tips to Avoid Borrower’s Remorse on a Small Business Loan

Last Updated on February 21, 2020

Getting a small business loan in 10 minutes sounds great, right? As easy and simple as business borrowing is, it may not be the best move for you to make if you end up having borrower’s remorse on your business loan.

If funding can help you take things to the next level, then you should seek a small business loan. But remember, whether it’s your first or fifth round of funding, not all small business loans are created equally. There’s a minefield of lenders out there—many of them without your best intentions at heart looking to charge sky-high interest rates. These lenders may look to sell you on a loan however they can.

In this post, we’ll share a few helpful tips about how you can make sure you’re getting the right small business loan, and avoid a case of borrower’s remorse.

borrowers remorse small business loan

Tips for Avoiding Small Business Loan Borrower’s Remorse

Avoiding borrower’s remorse doesn’t mean refraining from getting a loan or merchant cash advance altogether. It just means taking a different approach to business finance—in which you prioritize the long-term, instead of immediate funding.

  1. Define Your Reasons: Why are you seeking funding? There are always opportunities on hand, but make sure that the one you’re chasing is worthwhile. Or, if you’re solving a problem, be sure that the funding will help you solve it for the long term. Overall, be sure that you’ve identified a clear path to growth (even if the lender didn’t require this as part of the application).
  2. Do Your Research: Does the lender or financial institution you’re working with have a trustworthy reputation? Unless you qualify for a bank loan, you’ll have to ask a few questions. Are the rates that you’ve been quoted in line with the norm for your credit score and industry? Be sure that you’ve done your fair share of research before accepting the deal.
  3. Consider the Deal: Will the interest rates, loan terms and amount work for your bottom line? Take the time you need to consider the deal, and evaluate whether or not you’ll have cash on hand to manage payments. Be sure to figure in the added revenue you’ll earn from using your new working capital, as well. 
  4. Find a Trusted Advisor: Don’t take the funding journey alone. Through untrustworthy brokers and lenders, sales staff will be pushy and vague. When you find a lender or marketplace that you can trust, though, you’ll find them to be a helpful source of information as well. Be sure to continue having conversations until you find a trusted advisor that can help you save money.
  5. Review Multiple Options: Never take the first call just because it seems like the right move. Instead, evaluate all the short term and long term funding options you have available. One way you can easily do this (without multiple credit inquiries) is applying through a marketplace like National, which compares potential offers from 75+ lenders at the click of a button.

Well, What Exactly is Borrower’s Remorse on a Small Business Loan?

Has a brand new item ever caught your eye in the store? Despite the hefty price tag, you bit the bullet and bought it anyway. Then later on, you realize it’s similar to something that you already own. 

That’s a classic case of buyer’s remorse. In the small business world, having borrower’s remorse on a business loan is quite similar.

You have a new opportunity in your business to take things to the next level. Just to test the waters, you make a few phone calls or fill out a few forms and learn what you qualify for. You get caught up in the new opportunity, and without shopping around to learn about all of the available options, move forward with the deal.

Why Small Business Owners Experience Borrower’s Remorse

The market has never been better for small business owners. There are financing options available everywhere to help you improve your business even more. The process is quick and simple, and after all, who has time to sift through options? 

If you want to avoid entering a situation that you’ll later regret, then you’ll need a more proactive mentality.

Business owners that receive funding generally have borrower’s remorse for a few reasons:

  1. Poor Payback Terms: Because the lender realizes that you’re in a time-sensitive situation, they’re able to give you less-than-ideal terms. They might explain that this is normal for a borrower in your scenario.
  2. Cash Flow Issues: At the time, your business’s cash flow isn’t quite cutting it when it comes to repaying your loan. 
  3. Lower Amount: You’re getting only half or a portion of the loan that you need to accomplish your goals.

However, all of these reasons essentially boil down to the same problem: you didn’t get the best deal on a business loan. It’s quite common to be blinded by the impact of the deal.

There are ways that you can avoid having borrower’s remorse on business funding.

Don’t Get Ripped Off: Download Our Free Ripoff Report!

Whether you’re considering getting funding or you have some contracts out, it’s important to know how you can avoid being ripped off. 

We created a free downloadable ripoff report with all of the information you need to get the best deal! The free report—10 Questions You Must Ask Before Getting a Business Loan—also includes a second free report—5 Things Your Business Lender Doesn’t Want You to Know.

If you want to get a business loan that will help (instead of hurt) you, then download it now!

To learn your business loan options through National, fill out our 60-second application!

National Business Capital & Services is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!

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About the Author, Matt Carrigan

Matt Carrigan is the Content Writer at National Business Capital & Services. He loves spending every day creating content to educate business owners across every industry about business growth strategies, and how they can access the funding they need!


Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advise from National Business Capital & Services and the author. Do no rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely in this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there maybe errors, omissions, or mistakes.