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• By Jill Wyatt
• Dec 26, 2019
• 4 mins read

Should You Renew Your Small Business Loan with the Same Lender?

Many small business owners with ongoing financing needs will consider renewing an existing business loan. A number of factors will influence the decision of whether to renew with the same lender. If you’re thinking about taking out another business loan with the same lender, here are some of the benefits and options you should consider first.

Benefits of Renewing Your Small Business Loan with the Same Lender

There are plenty of benefits of working with the same lender to renew your small business loan. Here are just a handful of advantages:

Established Relationship

Something that you can’t get when you start working with a new lender is the positive relationship that comes with months or years of rapport. If the lending advisor who facilitated your last small business loan transaction made the process easy, you could reasonably expect that experience again. Renewing your small business loan from the same lender gives you the ease of working with a company you already know and trust – and vice versa. There’s no need to take time explaining your business needs and financing challenges all over again. That means you’ll save time and have more ease and peace of mind in the renewal process.

No Hard Credit Pull

When you apply for a loan from a new lender, you can expect them to do a credit check before deciding if they should approve you for a loan. They want to make sure you can afford to pay them back for what they’re lending you. Instances where someone compiles a thorough credit report are known as “hard pulls.” As you may know, multiple hard pulls can negatively affect your credit score. So, when you’re renewing through a new lender, you might see a blemish on your credit report as a result of this hard pull. If you stay with the same lender, only a soft pull is required to verify information. As a result, your credit score won’t be negatively affected.

Favorable Loan Terms

If you have been the ideal borrower to your present lender, you can expect to see some nice loan terms when the time comes to renew. Being a responsible borrower means making all payments on time. And in full. Or getting in touch with your lender in advance in the event you cannot cover these costs in time. So, in addition to giving your credit score a nice boost, being a good borrower can help you score better loan terms in the future. It’s a win-win for renewing your small business loan with the same lender.

When to Consider Different Options

Indeed, there are many advantages to renewing your small business loan with the same lender. However, there are certain situations where you may want to consider a different option:

If you’ve improved your credit score since the last time you applied for a business loan. If you choose to work with the same lender for a loan renewal, they will likely offer you the same terms as before. This normally wouldn’t be a problem. However, if your credit score and overall financial situation have improved since you started working with this lender, you might want to explore your options and seek out better terms.

When concurrent funding with the same lender makes more sense. Concurrent funding is an option where the borrower gets approved for an additional sum before the original loan is paid off. The concurrent funding typically runs parallel to the original loan and enables the borrower access to more capital quickly. While being approved for concurrent funding isn’t guaranteed, advantages include faster processing time and no additional credit pull.

If you’re struggling to pay back your debt. Overcoming cash flow challenges can be tricky for small business owners. If you’re struggling to keep up with day-to-day costs, it may not be wise to renew your small business loan. And you might not get approved for a renewal if you’re having trouble with finances. But even if you do get approved, that doesn’t mean it’s the right choice for you. Instead, it might be wise to seek out refinancing options either through your current lender or through a new one.

As you can see, renewing your small business loan with the same lender can be a smart choice. But it is important to consider your options and the financial state of your business before moving forward.