Most small business borrowers call their lender twice: when they need a loan, and when something has gone wrong. Challenges and opportunities that happen in between often go unmentioned.
That’s a missed opportunity for small business owners. Your lender isn’t just a source of money. They’re one of the few people in your corner who has seen your financials, understands your business, and has a stake in your success. The six situations below are the ones where getting in touch with your lender early can save you time, money, and unnecessary stress.
You’re worried you might miss a payment
Missing a loan payment can trigger penalties, damage your credit, or strain your relationship with your lender. If you see hard times ahead and are worried about making an upcoming payment, it’s best to call your lender right away.
Taking a proactive approach shows that you’re looking for a solution rather than ignoring the problem. Lenders appreciate the transparency, and when they’re kept in the loop, they may be able to offer a short-term option like a payment deferral or loan restructure to keep you on track.
You’re planning to sell an asset
Collateral can include residential and commercial property, equipment, and inventory. Once an asset is pledged, your lender holds a legal interest in it. This means selling that property or equipment without their knowledge can violate your loan agreement, which may require you to put part of the proceeds toward the loan, accept adjusted terms, or even face early repayment.
The same rules apply if your collateral suffers major damage. For example, if your business property floods and you file an insurance claim, your lender needs to be involved. Because they’re named on the mortgage, they likely will be listed on the insurance check and must sign off on repairs to verify that the property is restored to its original value.
Before you sell, replace, or make major changes to any asset tied to your loan, you need to give your lender a call. Keeping them informed gives them a chance to flag any issues, work with you on repair approvals, and walk you through the fine print of your loan agreement.
You’re expecting growth and will need additional money soon
If you’re preparing to expand your business by purchasing a new location, hiring more employees, buying new equipment, or expanding your inventory, give your lender a call.
Instead of waiting until you have an urgent need, planning ahead gives you time to compare options and structure financing that supports your growth. And even if you’re planning to pay cash, it’s worth the conversation. Your lender may have financing options that work better for your cash flow.
When you see growth opportunities on the horizon, it’s best to contact your lender at least six months in advance. The earlier you start the conversation, the more time you’ll have to explore your options and prepare for the next stage of growth.
Your business is changing structure or ownership
You don’t need to call your lender every time you make a business decision. But when you’re making a change to the structure or ownership, you should reach out. Changes can include bringing on a partner or buying out an existing one, switching business classification, selling part of the business, or merging with another company.
Lenders care about these changes because they can affect your loan terms, liability, and structure. Before you finalize anything, reach out to your lender to see if they need to adjust the paperwork or approve the change.
Your business finances feel off
Most lenders schedule an annual review of your financials to make sure your business is on track and your loan is performing as expected. But if cash flow feels tight and you’re not sure why, or you’re not hitting your expected revenue targets, don’t wait for your annual review to bring it up. Taking a proactive approach shows them that you’re willing to tackle an issue rather than wait until it’s a real problem, and gives them the opportunity to offer solutions. Even if they can’t help, they can likely point you to someone who can.
You have questions about your loan agreement
It’s worth revisiting your loan agreement every so often to make sure everything is on track. As you do that, terms that seemed straightforward when you signed may raise questions as your business evolves.
If a term is unclear, call your lender and ask about it. This shows that you’re paying attention and taking your obligations seriously. It builds your lender’s confidence in you as a borrower, and it ensures you understand what you’ve signed. Leaving questions unresolved can lead to missed obligations or surprises down the road that could have been avoided with a quick conversation.
Regular communication between you and your lender benefits everyone
Your lender isn’t just there to process your loan application and provide financing when you need it. They can help you solve problems and plan ahead, supporting you and your business.
Whether you’re working with Grow America or another lender, regular communication prevents small issues from becoming big ones. Keeping them up-to-date on important changes in your business, whether good or bad, gives them the opportunity to offer guidance, identify potential issues, and help you explore solutions. If you’re unsure, making the call is usually the right move.
