If you’re a business owner, chances are you’ve thought about taking a business loan. However, there are a few things that you should keep in mind as a business loan borrower, and here they are:
- Banks Don’t Fund Business Plans
The one thing that over-enthusiastic entrepreneurs need to realize is that banks do not fund business plans. If you’re asking for a loan amount, you need to have the financials to show for it. If you aren’t confident about your business, so isn’t the bank.
- Banks may sometimes ask for Personal Collateral
Banks don’t really trust businesses when it comes to giving out loans. That is why, even though you do have good financials, banks may sometimes ask for personal collateral. Apart from this, you need to remember that banks aren’t your friends – they’re just banks, and nothing more.
- Loan Repayment may Cause a Leak In Your Cash Flow
Repayment of business loans will cause a leak in your cash flow. Before taking a business loan, this is something that you should consider very hard. If you’re a small business or in the starting stages of business, ask yourself this: Can you afford to make monthly payments at this stage? Loans are usually repaid over a long-term and require quite a lot of commitment.
- You Will Need Audited Company Accounts
Although this goes unsaid, you need to keep your accounts prepared and ready for inspection by banks that you’re approaching. You need to have your balance sheet updated and audited.
- Getting a Business Loan Approved Is Not Easy
This is something that needs to be said to a lot of people. Business owners get disheartened by banks not approving their loan applications. The one thing that separates entrepreneurs from the rest is their ability to persevere. You’ll probably get rejected by quite a few banks before getting a loan approved. That’s just how it works.
