Deciding to get a business loan is one of the most important decisions a businessman needs to take during the life of his business. It can come at an early stage of the business even as early as starting up. When a business loan is being considered for matters concerning expansion, revenue growth or even debt refinancing, it is very critical that identifying your strategy is present.
Proper planning on getting a business loan helps create a good strategy and management of the loan during its term. Here are a few questions you may need to answer to identify your strategy.
- Why do I need a Business Loan?
Knowing why and what you are getting into is very important in business. It is true especially in operating decisions as this can either pull your business up or bring your business down. Identifying the need for the business loan will greatly help you with justifying why and what you are getting into. Knowing the reason for your action on taking up a loan will help you create that commitment in planning and managing the loan.
- Where do I get my funds to pay for the amortizations?
Getting a business loan doesn’t stop once you have received the amount of cash you applied for. The commitment of paying off your amortizations is expected and the discipline of paying these on time should be there. This is why at the beginning of your decision-making process, you should already be able to identify from what part of your business income can support and sustain the amortizations that need to be paid. This will also help you ensure that the income will be there to support the business loan.
- Does my financial capacity allow me to make a loan?
Identifying your current financial status is very critical. It is always a good way to review your personal financial status and your business’ financial capacity for getting a business loan. Knowing if you can afford something is the best decision one can make to keep your business growing.