When should businesses pay the bank a visit?
What we love most about banks is the diversification embedded in them. Whether it’s the multitude of services they offer or the customer segments they cater to, we know there’s something in it for everyone. So, if you’re one of those risk takers with an entrepreneurial mindset and decided to open up your own business, then you’ll be pleased to know that this post is specifically for you!
Building a relationship with your bank is inevitable. Today, tomorrow, or the day after, you’re bound to start communicating with your bank for your business’ financial needs, especially if you’re looking to take out a loan. But the question that begs itself here is: how do I know it’s the right time to take out a business loan?
First things first, what’s a business loan?
A loan is a financial term that indicates borrowing money. For whatever reason it may be, setting up operations or expanding beyond boundaries, businesses of all sizes approach banks to borrow some cash to finance their activities. With this in mind, business loans tend to be larger than personal loans because they aid in financing larger transactions, so the interest rate and the loan repayment period exceed that of other loans, too.
Finding the right driving force
Because borrowing money is a big leap, it’s important to identify the reasons that would drive you to resort to a loan and reflect on them. For example, if you’ve decided to purchase new equipment, agreed to hire new personnel, or uncovered an opportunity that will enable you to reap significant benefits, then these are all contributing factors that will force you to put on your shoes and run to the bank.
But, don’t get too excited that you forget to think for a moment. Make sure that these are all decisions that you will be acting on in the near future, and only then can you consider a loan as an eligible solution. If, for instance, you’re considering taking out a loan to pay back some of your debt without thinking the plan through, then we’ll be saying this only once: abort mission!
Time is money… literally
You might be wondering what happens after you find your driving force. Well, it’s determining whether or not the timing is right. While this may sound odd at first, the right time to ask for a business loan is right before you need it. And here’s why.
If you’ve decided and fully committed to the idea that you will be purchasing those much-needed equipment, or hiring that brand-new marketing team, or scaling your business for better growth opportunities, then this is the best time to approach a bank. In the end, you don’t want to be too early or too late and risk losing the ability to repay the loan.
Consider the future
Because a loan is a long-term business investment, keep in mind that you need to be able to repay back the money, in time, in full, and with the additional interest rate. Make sure to map out a repayment plan as soon as you can and take decisions that will keep you financially healthy throughout your operations. This will ensure you’ve made the right decision and ease your worries.
It’s important to seek the right reasons and the right time that may drive you to take out a business loan. So, if you’re considering such a decision, have a warm cup of coffee, sit in silence and start mapping out all the reasons a business loan is best for your company. And once you locate the best time, then you’ll find us online and offline to help with whatever you need!
