It's not easy to get a small business loan, but if you own your own small business, you will want to consider this sooner not later. I'm sure that you enjoy what you do, because if you don't, you wouldn't have started this business in the first place. That's one thing about owning a business that is priceless. When you get out of bed each morning, especially on a Monday morning, you don't have the same dreadful feeling almost everyone has when they realize they have to go to work. If you own your own business, it's likely that you work on nights and weekends without even thinking about it. It's your source of income and your livelihood.
Does your business run like its own entity, or is there a blurry line between business and personal things? Some business people find it difficult keeping personal expenses apart from business expenses. At some point or another, you'll probably need to look into getting a small business loan. This is when it's especially important that you've been keeping your books properly, and there is a very clear line between personal and business. If you need some money for something that's not business-related, you should avoid taking a small business loan at all costs.
One of the most important parts about borrowing money, especially if your business is concerned, is booking everything properly and making your payments on time. It's also important to remember that money costs money. You should really only take business loans for an amount that you're able to utilize quickly. Why pay 10% to borrow money if it's just going to sit in an account earning 0.05%?
If you end up borrowing money that you can't repay in a timely manner, you'll end up in a lot of trouble especially since most business funding sources require that you personally guarantee the repayment of the loan. You might think to yourself, "Well that's okay, that's why I do business as a llc." That, however, is not the case. Personal guarantees on business loans supersede any limited liability you get from your status as an LLC. If you cannot make good on the payments, the lender could end up taking your car, your house, or even your business, to help make themselves whole on the balance due.
Business funding has many advantages. Don't just go and borrow anything that you can get your hands on. That's a bad idea. Just because a bank approves your loan does not mean that you don't have to carefully and systematically consider the likelihood and your ability to make the payments. That's always a good practice too, to look over your profit and loss statement and take a look at your expenses, and deciding which of them you can maybe do without.
Does your business run like its own entity, or is there a blurry line between business and personal things? Some business people find it difficult keeping personal expenses apart from business expenses. At some point or another, you'll probably need to look into getting a small business loan. This is when it's especially important that you've been keeping your books properly, and there is a very clear line between personal and business. If you need some money for something that's not business-related, you should avoid taking a small business loan at all costs.
One of the most important parts about borrowing money, especially if your business is concerned, is booking everything properly and making your payments on time. It's also important to remember that money costs money. You should really only take business loans for an amount that you're able to utilize quickly. Why pay 10% to borrow money if it's just going to sit in an account earning 0.05%?
If you end up borrowing money that you can't repay in a timely manner, you'll end up in a lot of trouble especially since most business funding sources require that you personally guarantee the repayment of the loan. You might think to yourself, "Well that's okay, that's why I do business as a llc." That, however, is not the case. Personal guarantees on business loans supersede any limited liability you get from your status as an LLC. If you cannot make good on the payments, the lender could end up taking your car, your house, or even your business, to help make themselves whole on the balance due.
Business funding has many advantages. Don't just go and borrow anything that you can get your hands on. That's a bad idea. Just because a bank approves your loan does not mean that you don't have to carefully and systematically consider the likelihood and your ability to make the payments. That's always a good practice too, to look over your profit and loss statement and take a look at your expenses, and deciding which of them you can maybe do without.
About the Author:
There are a lot of things to take into consideration when getting a small business loan. Your power to repay it, for one thing. Surprisingly, people borrowing money without contemplating how they'll repay it is something which has hurt our economy a great deal.
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