A business loan is pretty important if you want your venture to get to the next level. However, keep in mind that getting it doesn’t guarantee success. You must understand how to make it work, and follow through with your plan. With this in mind, take a look at the questions you should ask yourself before taking out a business loan.
Is getting a business loan the right move?
As we’ve mentioned, a business loan can help your company in so many ways, but there are other sources of funds that you could go to. If you have a partner, you could potentially go to them for more capital. An angel investor could also help you go to the next level in exchange for equity. Also, check if your company could qualify for special grants.
How’s my credit history?
Your credit report will be a factor in the lending entity’s decision whether or not to deal with you. If your credit history falls short of impressing them, you can still apply for a business loan, but don’t expect to get a low interest rate. You could also try to improve it before applying.
Can getting a business loan fit in the budget?
This should be a no-brainer, but many business owners tend to overlook this important question. You have to make sure that your business is making enough money to be able to make the monthly payments. Even if you have a good track record, try to consider possible changes that could reduce your income like the changing of seasons or other expenses.
How soon do I need the funds?
Business loan funds are used in many ways and the timeframe for these vary. So you should determine how soon you need the funds, and see if the lender you are dealing with can work with your schedule. Remember, there are plenty of lending companies and banks out there, and time is money, so think it through.