It’s easy to sit back and relax as soon as your small business loan application has been approved, but this is potentially where the hard work begins. You see, you need to keep up with your business loan repayments, as failing to meet these could see your business sink rather quickly.
Thankfully, managing your business loan repayments is simple – that is, if you have an effective plan in place. Today, we’re going to tell you how you can easily stay on top of the repayments for your business loan.
In order to be strict with how and where you spend your finances, it’s important to have a budget for your business. After all, you don’t want to spend your loan on non-business transactions, nor do you want to overspend money that should’ve been left aside for your repayments.
It’s recommended that you take some time to regularly sit down and go over your business finances, as well as your budget. Can you make any improvements? Is business going accordingly? Regular financial assessment should keep both your business and repayments on track.
Keep On Top of Your Credit Score
Just because you’ve had your loan application approved, doesn’t mean you can suddenly give up on good credit practices. Be sure to continually avoid hitting the limit on your credit cards, consolidate credit cards to lessen your balances, and ensure all of your bills are paid on time by either setting-up direct debits or electronic reminders.
Maintaining a good credit score puts you in a good position to gain easier access to additional funds down the track, as well as a greater choice of lenders or loan types, potentially saving you a significant amount of cash.
Pay Back More When You Can
This is an important piece of advice for those managing their loan repayments, but it’s also one that’s easily overlooked. While you could just cruise along and meet your minimum repayments each month (or depending on the repayment schedule, daily, weekly, or fortnightly), you’ll actually pay off the entirety of your loan sooner and save additional interest by increasing these repayments when you can.
Like many businesses, you may experience seasonal fluctuations in sales, therefore having a boost in cash flow. We advise that you should boost your repayments during these periods in particular.
Know When to Refinance
While we would advise against multiple small business loans, some businesses do have more than one. If you’re in this position, you should consider refinancing or consolidating these loans into a single, more manageable loan. With an excellent credit history and booming business, you may even be in a great position to negotiate a better deal.
Be Upfront if You’re Struggling with Repayments
As they say, honesty is always the best policy. If you’re finding it difficult to manage your business loan repayments, then there’s no use hiding this fact and waiting until a collections agent contacts you. It’s best to be upfront and honest with your lender as soon as this issue arises, as they may be able to assist you with something such as a short term repayment holiday until you’re back on your feet again. If the situation is dire, other outcomes can also be sought.
There you have it – just some of the most effective ways you can manage your business loan repayments successfully. If you have any further questions regarding business loans, the Lumi team are always on-hand to assist.
Need a business loan between $5,000 – $100,000 for your SME? Visit Lumi’s website or call 1300 00 LUMI to see how we can help your small business.