The lowest rate doesn’t always mean the best partner. Sometimes, you get what you pay for. 

The most overlooked part of a process is the reference calls, but it might be the most important. You’ll feel awkward interrogating someone who knows the partner under consideration, and you might be nervous that they won’t be honest with their feedback. You’d be surprised. 

Most founders want to help others find success in their entrepreneurial journey. Besides, have you ever known a founder to pass up an opportunity to complain about a capital provider? The importance of confidence in a partnership far outweighs the awkwardness of a discussion.

Additionally — ask your network before asking the financier for references. If you can’t find references, reach out, and I’ll try to help where I can.

A few reference questions to consider for your call:

— What has it been like to work with the partner?

— Have you had to work through any issues together?

— Have you had to renegotiate any parts of your deal?

— Have you had to work through any covenant problems?

— What was the legal process like?

— Have there been any surprises in the relationship?

— How involved are they?

— Do you feel like they are supportive of the business?

A well-thought-out process to search for a lender can reveal things about the partner that you probably missed in your earlier, friendly conversations.