4 business loan mistakes to avoid
A business loan (when used properly) can help you to grow your business and works with your business as it changes. However, it is vital that the business loan you choose suits you and your business’ needs. Ensuring you have the right finance solution for your business means you won’t be paying more than you should be or end up locked into a loan for longer than you need it.
The Credit Savvy team have rounded up some of the most common business loan mistakes to avoid when considering your finance options:
1. Not being prepared
Like any type of finance, when you apply for a business loan, lenders will require background information and financial documents in order to assess your application. While they can be time consuming to put together, ensuring that your financial information is up to date prior to enquiring about a loan will make the process much smoother. Don’t forget to check your business credit score before you apply!
2. Applying for the wrong type of finance
There are many different options when looking for business finance, from a secured loan to an overdraft, to asset finance. That’s why it is important to make sure that you apply for the right option for you and your business.
3. Not accounting for all the costs
Every loan comes with attached costs such as establishment fees or annual fees. Make sure you take these into account when considering your loan options and budgeting for your repayments and know what you are agreeing to (and paying interest on) before you take out the loan.
4. Not matching the term to the need
Make sure you think about the purpose of the loan before you apply for finance. For example, if you are purchasing property, you will most likely require a longer term, however, assets and working capital may be much shorter terms. Making sure the term matches your needs ensures you don’t pay too much and that you have the flexibility you need from your finance.
If you think it might be time to expand your business, Credit Savvy can help you compare a range of business loans providers to find the right product for you and your business. Check out our business loans page and start comparing today.