Make an Informed Choice and Find the Best Business Loan
‘Money makes money’, so the saying goes. Whether you are starting a new small business, expanding your company or taking advantage of a commercial opportunity, having access to large amounts of finance can give you the freedom you need to run your business your way and increase your profits. In this blog, we discuss business loan tips to help you to know what to look out for when applying for finance.
Many companies are nervous when it comes to taking out business loans, and rightly so. Whenever you are borrowing money for commercial reasons, it is vital that you understand your business and its budget so that your decision is an informed one. Below are some tips that will help you make the best business loan choice that can lead to successful financial profits.
Understand your Business Finances
Before you take out a loan, make sure you truly understand your business’ financial situation. What is your company’s total income and how much of that will be taxed? Have you analysed your cash flow? What are the high and low periods in your financial year? Are you planning on expanding your business in the near future? Asking yourself these sorts of questions can help ensure you are making the right choice and are finding the best business loan for your company. For example, you might want to consider if your business’ profits decrease during a certain season, as this could affect your ability to make some of your business loan repayments.
What is the current status of your business finance?
It is also important to understand the status of your business. Is your company a startup? Do you know whether you have a good or bad credit history? How well documented is your business’ financial history. Knowing how your business can be categorised is helpful as it will allow you greater insight into how others might view your company.
What do you need your loan for?
Business loans can be used for a wide range of reasons and can lead to great financial profits. Perhaps your business needs a loan to buy new products or equipment that will give it an edge over your competitors. Or perhaps you need a loan to save your company from multiple debts and to ensure that you are not paying extortionate interest rates or penalties. The right business loan could help your company significantly increase its income.
What is the Best Type of Business Loan?
There is no simple answer to this. There are many business loan products out there because every business is unique. This question is again best understood through knowing your business well. In some situations a short term loan may be the best option for your company; you may need extra finance quickly to act upon a profitable opportunity and will then be able to repay the loan in a small amount of time. In other situations, a longer repayment period may be more practical.
Banks v’s Non-Bank Lenders
When researching, remember that there are companies that offer business loans, not just banks. In fact, using a bank alternative lender could give your company more financial freedom, as well as a loan with a lower interest rate.
In addition to this, it can be very beneficial to find lending companies that offer flexible loan products that can be tailored to your business’ needs. ALC Commercial, for example, has a network of private lenders and can, therefore, offer a range of flexible business loan options that can be adapted to your situation.
Understand your Loan Contract
Like with all legal documents, it is vital that you read your business loan contract thoroughly and understand what you are agreeing to before you sign. Some crucial points to look for include repayment structure, the loan duration, the interest rate and any fees and charges. Through understanding both your business and loan contract, you can make a well-informed decision which can be truly beneficial to your business.
Know your business inside and out
If you know your business inside and out, then a business loan could help your company achieve its goals and increase its profits. ALC Commercial helps businesses of all shapes and sizes. Whether you are a startup, a small business, have a bad credit history or have limited financial documentation, we can help you find the best business loan option that can be tailored to your situation.