It can be difficult running a company on a tight budget. You may be able to do more work and make more profit, if you have better cash flow, but before taking a loan to give you the extra capital, you need to consider if this is really a smart move. It is very easy to get into debt, but much tougher getting out again. There are a number of things you should do, before signing that loan agreement, to make sure you don’t get yourself into trouble.
Work out if you can afford to borrow
There are a number of questions you should ask yourself before taking a loan. Firstly, ask yourself why you are borrowing and do you really need to do it. Is taking that loan your best option for finding the additional money that you need? Think about what the repayments are going to be, and be very sure that you can actually afford them and also ask yourself if now, is really the right time for you to be borrowing money? You may be better off saving some money for now, and borrowing money later.
Knowing who you are dealing with
Sadly, there are many unscrupulous people out there, who do not act in accordance with the strict financial regulations that govern the market in Australia. Credit providers and brokers in Australia must be licensed, and it is easy to check ASIC Connect’s Professional Registers to check. When you are looking for short term business loans, ensure you fully understand exactly what you are signing up for. Ensure you read the terms and conditions of any loan contract, paying especial attention to any potential penalties for missing a payment, as well as seeing what happens if you want to pay the loan off quicker than the contract stipulates. Be suspicious if you are offered rates that seem abnormally low, as you may be entering into a scam. Also before applying for any loan from a website online, check that the company are indeed legitimate.
Ensure you are getting the best loan for you
Make sure you are getting a good deal with the interest rate being charged, especially if you are consolidating loans. If the interest rate on a loan to consolidate your debts is higher than your previous loans, you are simply going to cost yourself money. It is also a good idea where possible to take a short term loan rather than a long term one. Even if the rates being offered are quite low, when interest mounts up over a long period of time, you will be paying more money out as interest, than if you were paying the money back over a shorter period of time.
A quick Internet search will provide you with a number of short and long term business loans from companies in your area. As loans are normally made against security, i.e. your home, it is important that you very careful select the right company, offering the right rates, and repayment schedule that you want and are happy with. Beware of any that seem to make unrealistic promises, or do not put absolutely everything in writing, before asking you to sign.