A business loan it’s a financial tool that you’ll become familiar with as your business takes off. You can get one by asking a bank for it, or you can go the quick route and use a loan agency like Maxiron to get it. No matter where it comes from, the purpose of a loan is to help you navigate a slow flow of cash to keep your business operating as usual.
Still, seeing all this money handed over to you can put some ideas in your head that are not really sound or are disasters waiting to happen. To make the better use of this money we have prepared this little guide that will help you handle this cash in a way that is not only recommended but also secure for the future of your operation. Read on and find out what’s the best strategy for you:
Have an extra account to handle the Money
If you are working with a bank and they are self-aware about the destination of the money they are lending you won’t have to go through this steps since most banks will loan the cash to you, but will ask for proof of purchase of materials, receipts and a lot of documentation before releasing the money specifically for what is needed for.
If you are dealing with a loan agency make sure they send the funds into a separate account from all the funds’ reserves of the company. If you have business partners make sure that their signature is required to manage the funds. It’s not an issue of trust. It’s about using the money for what it’s needed for.
Work out a Payment Plan with Automatic Payment Plans
First of all, nothing will say “commitment” to your bank or loan agency like giving them the power to collect their monthly payments automatically from your expenses account. Not only you’ll be covering your debt, you will also be building your reputation as a reliable customer and your credit score will be synonymous with good business, the bank or the agency will be willing to work with your again in the future.
The large account balance will look great for a while, but remember that you asked that money for a reason. Work the numbers with your accountant and be sure that every penny of the loan is assigned to cover the costs. Also, keep track of your earnings and be mindful of the way you spend money. Even if you manage to collect the money that is owed to you and you are able to amortize the loan try to keep the payment plan intact unless the interest rate is too crushing.
Don’t spend for the sake of Spending
Indulging yourself because you are suddenly able to do so will get you and your business operation back to the tight spot you were before taking the loan. Getting a loan is the chance to get back on your feet and a lack of awareness about operational expenses will bring more problems in the long run. If you are not disciplined with money, then hire someone who handles that for you and give him special directives on how they should handle the funds. Be sure to keep a good percentage of control like in the form of supervision and signing off each transaction, that way you can also avoid being scammed.
Don’t Lose Sight of your Goal
Always remember that the money you are taking from a loan is to keep something you built afloat. Keeping your hard work alive is complicated and it needs these financial instruments to navigate bad times. If your business happens to have trouble with your payment plan, don’t hide from the bank or the loan agency. An honest sit down with them will work wonders for you and you won’t force their hand into using the legal system to get their money back.
As you can probably gather by now, getting the loan to save your business may prove to be easy, but making good use of it it’s an entirely different science. Follow these simple rules and you’ll be able to navigate through hard times and keep yourself afloat.
