Whether you are an entrepreneur or a CEO, whether you have been in the business or you are just starting up, what are some of the factors you need to consider before taking that loan?
Why do you need the loan?
Defining your purpose for desiring a loan before you approach your bank is very important. The fact that you are qualified for a business loan is not a reason for you to apply for it. Every human has the tendency to show off. So it is important you scrutinize yourself and your motive for applying for loan.
When your management staffs are not qualified for cars, why get loan to buy them official cars? If renovating your office will not generate more income, you may have to put off the loan intended for that purpose.
True, most businesses get loan based on the fact that they need to expand their businesses. This may not be wrong in itself. But many organizations are not prepared to handle the changes that come with business expansion. Before you get that loan to invest in your businesses, do a comprehensive feasibility study. Even if it seems you know everything about the business, you may not know everything about an unpredictable market.
What type of loan do you need?
How intensive your project is will determine how much you are applying for as loan. You do not have to run to the bank each time you feel you are out of cash. You can explore other means of raising money when problems arise. In countries where credit cards are allowed, you may consider it an option. But this should not be your number one solution. Although it is rare these days, getting soft loan is the best bet to solve your financial crisis. If you are credit worthy enough, friends and family members may come to your aid when it is time.
If you are considering establishing a permanent office, it is better to get a mortgage than getting loans for leasing and renting purposes. Landed properties quickly pick up values, that is why most house owners increase rent immediately the last payment expires. The best way to safe money is not to pay rent but to pay debt on mortgage. Such loan is encouraged.
How much can you pay back monthly?
When getting business loans, it is pertinent you consider what it will take you to pay back monthly. Before signing the loan bond, calculate the cost of running your business meticulously. Doing this, you will avoid agreeing on payment terms that you are likely to default. If it is obvious that you will not be able to pay back the loan according to the requirement of the bank, it may be wise not get the loan.
Some people have made the mistake of servicing loans at the expense of their happiness. Many others have completely sacrificed their family relationships because they have to squeeze out extra time and effort to work more with the aim of servicing a loan. Beware not to fall victim. Take loan that will give you room to do your business, stay happy and pay back conveniently.
How long will it take to pay back the loan?
Depending on the project, loans are paid back on long term and short term basis. Sadly, some have fallen victims of loan slavery. They have spent several years servicing a loan. Sometimes, the payment period gets extended so much that the debtors get stuck in a geographical location doing business they do not like.
Sometimes, the value of the loan is lost as the debtor is likely to mismanage If the repayment of a loan will take several years(some pay back loan for decades). Why get such when you are not a political entity that is sure to repay its loan even if a current leader quits office?
How is your credit history?
Even if you want to shy away from this question, you still have to ask yourself if you do not want to run into trouble because of getting loan. Do not make the mistake of using loan to pay back loan. If you are currently indebted to some financial institutions or banks, it is largely due to a level of mismanagement on your part. That being the case, there is no guarantee that you will be able to manage and pay the current loan successfully.
Even if your current prospective lender is not aware of your previous indebtedness, the knowledge will get his attention eventually as you struggle to meet up with the requirement he is offering. A little adjustment to your lifestyle and viewpoint about money and truthfulness may be what you need now, not a loan!
What is the interest rate?
When seeking for loans, the tendency to get desperate is high. So, it is important that you take your time to analyze and compare if you have other sources that can give the same loan with a lower interest rate. When the interest rate is too high, you may find it difficult to service your business knowing that you have to pay more to the bank.
At the verge of the getting the loan, you may make promises that you cannot fulfill, even when it is offered with the highest interest rate. Beware and avoid situation that you will later regret.
Is there alternative to the loan?
As noted earlier, it is important that you probe your thought and determine what your motive is for applying for the loan. if your business is steadily progressing now, you may get to a height that will be enviable later if you are patient. If however you are sure that the loan will serve as impetus for you to achieve your desired business goals, go for it!
Attend The EPIC BLOGGING Seminar (Jan 29th - 30th, 2016)
We are lending Company located in United States, and we offer from $50,000 to $500 million and above. We have be existing for the pass 19 years here in united States, we are fast and save, we deliver within few hours to you anywhere in the world.. Do please contact the CEO. President of this Company on her private email for processing the loan amount requested. Thanks and God bless. Mrs. Reynavila CEO/President United States of America
ReplyDeleteThanks as you apply for this loan to assist your business.
URGENT LOAN OFFER FOR THOSE that are serious minded