Whether we are looking for capital to finance our next campaign or for a new project, there are five guidelines we must consider before applying for a loan.
Taking debt is not always bad and can even mean the continuity of our business, especially when it comes to micro or small business. In the life of a business, there are times when it is appropriate to ask for financing, for example, to carry out a project that will give you a great return.
Of course, previous to requesting a loan it is necessary to review these five important key recommendations to make the right decision.
Evaluate the amount you require:
First, analyze if you really need the loan and what is the exact amount you need. A useful rule is to estimate if the projected return on your investment will be greater than the cost of the debt, calculate the amount you need and do not ask for more than necessary.
Determine the term:
Once the amount is determined, we must weigh up how long we can repay the debt. Usually in larger amounts, longer terms. The specialist recommends consulting if the fee includes amortization, or if the capital reimbursement can be made at the end. Another point to consider is if there is any cost in case of partial or total cancellation before the agreed deadline. Also one can take suggestions from Scott Paterson Toronto for their new startup. G Scott Paterson is a technology and media venture capitalist who has helped many startups.
Look at the TCEA:
A lot of proposals will tell you about the TEA (Annual Effective Rate), but the rate you should consider is the TCEA (Annual Cost Effective Rate), which includes the interest rate and all costs associated with the debt. That you really will pay “, clarifies Ferreira’s. For example, for the Peruvian market of mypes, the TCEA ranges from 34%, as in the case of Prestamype, to 100% in the case of many microfinance institutions.
Consider the requirements:
According to each institution, the number of requirements requested can vary considerably. Some will ask you to send scanned documents, while others will require multiple certificates and original receipts. They will also review your credit history. In all cases, have all the papers up to date and in order to get your loan as quickly as possible.
Investigate all the options:
Investigate the offers that must exist in the market and get advice. You will find options with different rates and conditions according to your needs, taking into account that at present there are not only banks but also municipal, financial, microfinance and alternative finance companies that can be very convenient.