Small Business Loans are the bank’s way of helping out the little guys or small-to-medium enterprises (SME).
This type of loan is extremely beneficial when it comes to starting up your business or if your business is in financial strife. However, though lower payments and longer repayment terms may work in the short term, you should be aware of how it affects your business in the long run. To help you avoid financial trouble, we’ve put together a list of common mistakes made by small businesses to ensure you’re not one of them.
Mistake: Not having a business plan.
Solution: Discussing specifics with your broker.
Prior to your loan application, take the time to determine exactly what you intend to use your loan for, so your broker can propose the best loan for your situation. For example, if you are looking for a loan to cover new equipment, there’s an equipment loan for that! For more information on the different types of small business loans, get in touch and we’d be happy to run you through them.
Mistake: Wait, what’s a Business Plan?
Solution: Business Plan 101.
A lender is more likely to provide you with the right loan if they can better understand your business, including where the money is coming from now and where it will come from in the future. A well-constructed business plan, including your products, services and target audience, will better enable the lender to tailor a solution to your needs. Our team can assist you in compiling all the necessary information needed for your business plan.
Mistake: Not keeping your finances up to date.
Solution: Update them!
Depending on the size of your business, lenders may also require information regarding your personal finances as well, so it would be a good idea to have them on standby too. If you feel this may be a bigger job than anticipated, we’ll be happy to help you out.
Mistake: Ignoring the sneaky fees and hidden expenses.
Solution: Read the dreaded fine print.
More often than not, business owners sign up for a loan under the impression that the balance of the loan itself is all they need to pay off. We hate to be the bearer of bad news, but usually this balance doesn’t include the administration fees and contract or appraisal costs in addition to standard interest expenses. Upon loan application, be sure to ask your lender about additional expenses to avoid any unwelcomed surprises or if you’re going through us, we will definitely let you know all of the costs involved.
Mistake: Not keeping track of your credit record.
Solution: Ask us about a credit review.
Since lenders check your credit record as part of the loan application process as a means of assessing your level of financial stability, it would be wise to speak to you broker about a free credit check to ensure there’s no issues that would hold things up.
Mistake: Not shopping around.
Solution: Speak to us about our network of lenders.
There’s a plethora of loan options on the market these days, both secured and unsecured, but it can often be confusing to know which is the most suitable product for you. We have a network of lenders, each with various loan products. Your broker will understand exactly what your needs are to provide the most suitable loan product without you having to lift a finger. Leave the running around to us.
If you are planning on taking out a small business loan or would like a review of your current loan, get in touch and book a complimentary consultation.