Choosing a lender and negotiating a deal

While it's tempting, you shouldn't just pick the lender that offers the lowest total cost. Instead, consider:

• the lender's size and ability to meet future needs

• the lender's knowledge of your business

• the lender's speed at making decisions (especially when obtaining a line of credit or other financing that must be renewed)

• the loan officer's status in the organization and the frequency with which loan officers change

• the costs and commitments imposed, for example, compensating balances, which some practices prefer not to maintain

• the lender's flexibility in responding to special requests, such as foreign letters of credit.

After you've found a lender, prepare to negotiate. Each party seeks an advantageous position, and the terms can influence whether the lender will fund your project. Here's what's negotiable:

• the total loan amount

• interest rate and fees

• loan term

• repayment schedule

• amount and type of collateral

• guarantees

• restrictive covenants

• acquisition of additional insurance on the life of the owner, key manager, or guarantor

• periodic financial reporting and the extent of accountant involvement.

Gary I. Glassman, CPA, is a financial consultant and partner with Burzenski and Co. PC in East Haven, Conn., and a Veterinary Economics Editorial Advisory Board member.