Congratulations, your loan application has finally been approved and you got the loan. In fact, the funds have already been disbursed to the designated account, so what next?
What steps would you take to ensure that your business gets the most value out of this loan and ensure that you don’t default? To help you answer these questions and make the most use of your loan I have outlined 3 tips that would help you manage your business loan effectively.
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- Create A Loan Budget And Stick to It – Before you start spending that loan the first thing you should do is prepare a simple budget for the loan. Outline the expenses you want to use the loan for and how you can repay the loan. To help make this process easily try out the funds from the loan in a separate account from your business. After you’ve prepared your loan budget ensure that you stick to it. You may be tempted to use some of the loans for some urgent expenses or anything else other than their intended purpose, don’t.
- Avoid Taking New Loans – Sometimes, after you have taken a loan and it seems insufficient or you are unable to pay it off for whatever reason don’t try taking another loan to finance the repayment. Apart from the additional costs, you would likely incur, you are simply digging a debt grave for your business and the more you borrow to pay yet another debt the deeper it goes. If you find yourself running into trouble with repayments, you should be cutting back costs or looking for ways to increase sales.
- Prioritize Loan Repayment– As much as you’re focused on investing the loan wisely, plan for its repayment. You can automate it for ease of payment. Because apart from the late fees, a poor loan repayment record would have a bad effect on your business credit score and that may make it more difficult for you to get more loans next time you ask for it. You want to avoid that, so make your loan repayment a priority.
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