7 Effective Tips to Survive with Long-Term Business Loans

Sep 12, 2019 by

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If your business needs to grow and you’re interested in seeing it thrive in future, then you may have taken out a long-term business loan or are thinking of doing so.

The benefits of a long-term loan over a short term are widely known, being that you’ll have a longer time to repay the loan with lower interest rates. But here are some tried and true tips for managing not only the financial end but the stress of taking out a long term business loan.

  1. Don’t Jump In

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Shop and compare rates carefully before you commit to a long-term loan. There are plenty of banks and lenders out there, so move wisely. Crunch all the numbers in theory, before you ever sign any papers. Will your business even make a profit over said number of years to make up for the interest cost? How trustworthy is the lender? There are all kinds of tools online to help you gauge the lender’s professionalism. Do all the research and number crunching in advance so that you are not mentally taxed when you sign the papers. You want to be a well-informed business owner.

  1. Build a Solid Financial Plan for Your Business:

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Most likely you have a very thorough business plan in place if you’re thinking of taking out a long-term loan. But if you don’t, it is a must-have before signing for a loan. What are your two, six, ten-year profit margins likely to be? How much can you afford personally every month if your business does not make the profit you anticipate. The stress of managing a loan will diminish exponentially if you have a strong plan for your business in place.

  1. Understand the Language of Numbers

Not only do the numbers matter, but so does the heart behind it. What is your business mission, vision and values? How passionate are you about your product or service? If you don’t believe in it now, how will you do so ten years from now when you’re still paying off your long-term loan? A plan includes your vision for your business and especially the “why” of what you do, the passion behind it. How you apply the funds you get in a loan will simply be a manifestation of your business mission. You’ll be able to allocate funds easily when you know the why of business.

  1. Manageable Bytes

Use an income driven repayment plan. At a glance there are dozens of loan repayment apps available on your smartphone to help you manage your debt. Each one is a little different, so read reviews to see how helpful they are. Make a repayment app work for you. First sort out all your loans, then plug in all the numbers and let it help you determine how much you need to repay every month. The apps have all kinds of features to help reduce the stress of loan repayment. It’s easier to plan for the long-term future of your company and your loans if you use technology as an aid.

  1. Minimum Pay Required

The advantage of a long-term loan is that the monthly payments are minimal. This is a great advantage when you’re running a business. But you’ve got the long game to think about. But be sure to pay every month to keep your account in good standing. You don’t want your account to go into default.

  1. Talk to a Financial Planner

If using repayment plan app isn’t enough, consult an expert to help you stay current with your debt repayment. An expert will take into account all areas of your life to help you see where you might be falling behind in finances. Don’t underestimate the value of another set of eyes. Experts have seen it all, and they won’t be shocked if you find yourself under a rubble of debt that you can’t foresee how to get out from under. You’ll be grateful for someone who can read in between the lines and see your business potential and pitfalls.

  1. Cut Costs at Your Business

You are in charge of your own business so take inventory often. Are there ways to boost sales and are there ways to cut costs. Chances are you didn’t start a business to sit on your laurels, so get in there and adjust your business to fit your financial loan repayment. This could be anything from selling off equipment you don’t need, or buying used equipment, or downsize to a smaller office if possible. There are many ways to cut costs in your business and still maintain the integrity of it. If you want to manage the stress of loans, keep a sharp eye on lowering the overheads of your business.

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