After going through documentation, interviews and the whole process of a business loan application, if you have got the loan, Congratulations! So, now that you have the funds, what do you need to do?
You could go ahead with your plans with the funds that you have. But you could also position yourself better in finances for the future. If you do this, you could get a variety of loans and at lower interest rates as well.
Following are the 6 things that you could do, which would set you up for potential success.
Schedule the repayment plan
Now that you have received the funds, you need to create a repayment plan and stick to it. Many borrowers forget about repayment for the time being and go on with their plans. But considering repayment is important as it impacts your future financing.
Consider the payments on your month by month budget. Keep a record of when to make the payments or better setup standing instructions with the bank or ensure automatic payments go from the bank. Do everything to ensure on-time payments. Missing payments or defaulting on loans is not good for the credit score.
As you know, a credit score is crucial in determining the loan products that could be available to you. Although there are loan options for bad credit as well, they are very limited. You have the chance to build your credit with the new loan you have secured. You can do this by making full payments on time. This helps in better rating, and you will get much more favorable terms in future business loans.
Peer into prepayment opportunities
Lenders also advise on prepayment options. You could look into double payments on payment dates, making a large lump sum payment at once, or trying to pay the entire amount before the final due date.
But you must be aware that some lenders charge a penalty for any prepayments as they lose out on interest. Check this before you take out a loan. If your business allows you to make a prepayment, then you must undertake it and save on interest.
Keep a lookout on the credit scores
Check your business credit score once the loan amount has been received. Many lenders report to the Credit Bureau, and satisfactory repayment of your loan can improve your score. Also note that getting a perfect credit score can sometimes require exceeding repayments, so look into it carefully.
Refinancing for lower costs
Consider refinancing to move into a lower-cost loan if you have a short-term loan and have been making payments fully on time. You may be able to refinance your debt into a long-term and low-rate loan.
This is a good idea if your credit has been improving and your revenue has been increasing. If you have shown responsibility as a borrower and business owner, then it’s worthwhile to look into refinancing. This can save your costs on loans.
Calls from brokers and lenders
Don’t be surprised if you get calls from loan brokers and lenders. If a UCC lien is on your business, the lender’s claim on collateral is established. This is public information, and interested buyers search for this. Lenders look at you as a prime candidate to borrow more money. You can stop these annoying telemarketing calls by listing your number on National Do Not Call Registry.
Growing the business
Think carefully about how you want to spend the business loan money. Now that you have funds, then you can think about producing a new product or setting up more efficient assets? Will you hire staff or service new clients?
If you have questions on how to manage this, then talk to other small business owners who have taken out loans. Be careful and wise about using the money that you have borrowed so that in the future, it makes it easy to manage payments to the lenders.
You can go ahead with expansions by buying new assets, getting a new premise or hiring more people to work for you. But ensure that you have a good schedule for prepayments. Plan well and make regular payments on time. This will ensure that your finances in the future are secured.