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5 Easy Checks To Find A Trustworthy Business Lender

Small business loans are excellent financial solutions that can help companies manage cash flow and seize growth opportunities. You can find them through credit unions, traditional banks, and online lenders, with plenty of options available. But have you taken the time to verify if the lender is credible? When it come to choosing a small business lender, it’s crucial to make sure they’re trustworthy.

That’s why we’ve put together some key indicators to help you identify reputable and legitimate lenders. Let’s explore the signs of a business lender you can trust. 

Small Business Lender Overview 

Online lenders are more accessible for small businesses than traditional banking institutions, which is why there is an increasing number of small business lenders in the market today. However, as with any other business, not all lenders are the same. 

Unfortunately, some may not uphold industry standards when it comes to business lending and may offer loans that have hidden fees and less-than-favourable rates and terms. 

You want to choose a business lender that makes fair and transparent lending decisions and offers financial solutions that can help your business thrive, not just survive. 

When browsing and comparing small business lenders, it’s crucial to pay close attention to:

  • Loan terms
  • Interest rates
  • Fees 
  • Repayment schedules

Having a thorough understanding of these factors is crucial when choosing the right lender, as it can impact long-term business success. For instance, some lenders may offer rates that seem too low at first sight, but they will charge additional fees that aren’t mentioned in the loan offer. 

Usually, The Signs Of A Trustworthy Small Business Lender Are:

  1. Active identification numbers ABN/ACN 

  2. Membership in the Australian Financial Complaints Authority (AFCA)

  3. Compliance with the AFIA Online Small Business Lenders Code

  4. Solid online presence

  5. Positive customer reviews and reputation

Active Identification Numbers ABN/ACN

All Australian businesses must have Active Identification Numbers ABN/ACN. These numbers are essential for enterprises to fulfil their legal, tax, and regulatory obligations.

In Australia, each company is issued a unique, nine-digit number when registered. This is your ACN (Australian Company Name), and you must display it on all public documents and eligible negotiable instruments. Your company’s name and ACN must be on the first page of all documents.

If your business has an ABN (Australian Business Number), you may utilise it in place of the ACN on your documents. The ABN is an eleven-digit number, which contains the nine digits of your ACN.

The ABN and ACN are common identification numbers. And businesses providing financial services should be registered companies with an active ABN/ACN. 

Membership In The Australian Financial Complaints Authority (AFCA)

The Australian Financial Complaints Authority (AFCA) is an independent external dispute resolution scheme intended for the financial sector.

The AFCA’s purpose is to offer fair and effective solutions for financial disputes.

AFCA considers and resolves complaints from consumers and small businesses about financial products or services.

Small business lenders that have AFCA memberships are more trustworthy as it showcases their commitment to consumer protection. 

The AFCA covers laws that regulate the conduct of financial institutions when lending to small businesses to ensure that credit is appropriately provided, considering:

  • Laws and legal principles
  • Applicable industry codes
  • Good industry practice

Compliance With The AFIA Online Small Business Lenders Code

Another sign that a lender is trustworthy is if they are in compliance with the Australian Finance Industry Association (AFIA) Code.

Compliance with the AFIA Code can ensure responsible lending practices and consumer protection.

The AFIA Code is customer-centric and supports small business borrowers by offering them the ability to compare online lenders’ loan products.

The AFIA Code is binding to all of its members, and it includes the following:

  • A customer-centred approach to the design, marketing, and distribution of their online small business loan products
  • Promotes high industry standards of service and builds best practices
  • Supports compliance with all legal and industry obligations
  • Provides a consistent benchmark for AFIA’s members, who are small business lenders, regarding matters like disclosure of comparable financial information to borrowers

A Solid Online Presence

In general, the stronger a small business lender’s online presence, the more trustworthy they are. This is usually because a robust online presence allows potential borrowers to research and verify the lender’s reputation. 

Reputable small business lenders tend to have secure websites with their own domain. These websites are professional and informative. They cover everything from accessible contact information and resources to detailed service descriptions.

This assures potential borrowers of a lender’s credibility and encourages them to reach out and apply for the financial product they need for their business. 

Many also provide their potential customers with relevant content through regular blog posts, offering insights into their products and services as well as practical tips for business finance.

So, when you’re researching a potential lender, make sure to check out their website and see the information provided. 

Positive Customer Reviews And Reputation

Lastly, an excellent sign that a lender is trustworthy and reliable is its positive client testimonials and reviews.

You may evaluate small business lenders reliably through online reviews, testimonials, and case studies. 

For instance, most satisfied or dissatisfied clients will leave reviews on independent platforms like Google Review and Trustpilot. This is why you should always check them out, as they will allow you to determine if working with such lenders is a good idea.  

Moreover, a strong reputation in the industry or endorsements from credible sources are positive signs of a lender’s trustworthiness.

Conclusion

If you want to confirm whether a small business lender is trustworthy and the right choice for your business, look for the five signs we mentioned above. Ensure they have an active ABN/ACN, AFCA membership, compliance with the AFIA Online Small Business Lenders Code, a strong online presence, and positive customer reviews. A reputable lender will typically meet all of these criteria. 

Lumi is a proud AFIA member and we practise complete transparency and responsible lending practices with our customers. We’re always committed to doing right by your business.

If you’re looking for more information on our Business Line Of Credit and Small Business Loan options, visit the Lumi website. Get in touch with us by phone at 1300 005 864, or email sales@lumi.com.au.

If you’re ready to apply for business funding, click here.

Disclaimer: We try our best to fact-check all information and keep it up-to-date, but this can not always be guaranteed. All of the information shared is for general use only and should not be considered personalised financial advice. Make sure to consult an accredited financial adviser, accountant and/or tax agent for personalised advice on matters related to your business’s or personal finance.

Post Author: Sally Le

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