If you own your own business and have taken out a business loan to help you get the financing you need to keep the lights on and improve your business, there are a few things you should know about paying back this money. Additionally, if you have plans to take out a business loan at one time or another, knowing a bit about the repayment process can help you make the best decisions when applying for your business loan in the first place.
To help you with both of these things, here are three tips for paying back a business loan.
Review Any Business Loan With Professionals
When you’re ready to apply for a business loan and have been approved for the loan that you’ve applied for, before you make everything final, it’s wise to have a few professionals who are in your business’ corner double check that everything you’re agreeing to with this loan is on the up-and-up.
Ideally, you should have a lawyer and your accountant or financial advisor take a look at the loan and its terms. They may be able to better determine if you’re getting a good deal and if there is anything hidden within the terms that could potentially harm your business in the long run.
Understand Your Liability
In most cases, it’s advised to keep your professional and personal life separate, especially when it comes to the finances of a business. However, with some business loans, you could be putting yourself personally at risk for repayment if your business isn’t able to repay from its revenue.
To determine if this is the case, take a look at the loan and see if you’ve signed a personal guarantee. If you have, this means that you’ll be personally liable for taking over the payments if your business isn’t able to do so anymore, which puts more risk on you both personally and professionally. While this isn’t uncommon, it’s a good thing to know before you agree to the loan terms.
Remember Loan Repayment In Your Budget
When you’re thinking about the financial responsibilities of your business and creating your budgets for the month, the quarter, and the year, make sure that you always include the repayment for your business loan in these expenses.
If you forget to pay on your business loan for even one month, you can be delinquent on your loan and face some harsh consequences that could put your business in jeopardy. So while you might have other business plans that you want to put in place using the money you have, you should always prioritize paying off your business loan first.
If you have a business loan that you’re working to repay, consider using the tips mentioned above to help you in doing this.
