After months of research and endless paperwork, you’ve finally been approved for a loan that can take your business to new heights! While you are putting into motion all the wondrous things you plan to use that money for, taking some time to map out a repayment plan will help you remain in good standing with the lender. We've prepared a few ways to help you create a solid strategy to tackle your business loan repayment, which will ultimately establish good credit for your business.
Review Repayment Terms
Before signing your loan agreement, take some time to understand the loan terms: Will you be penalized for paying the loan off early? What is the interest rate? What is the principal amount? How long will I be making payments? Familiarizing yourself with the details of your loan terms will ensure that nothing is overlooked and you are adhering to the loan agreement. It is also helpful to keep it in a secure location you can easily access. Our recommendation would be to save an electronic copy on a cloud backup drive in case the physical copy gets damaged.
Automate Payments
Take advantage of the autopay option if your lender offers it. If not, set up an automatic payment through your bank. Making payments on time ensures that your loan remains in good standing. It is also helpful to schedule payment reminders on your calendar.
Refinance
There are many benefits to refinancing your business loan. Refinancing can help you reduce your monthly payments and free up cash, possibly remove repayment penalties, and reduce the loan's interest rate meaning your business will incur fewer interest expenses. If you have multiple loans, look into consolidating them so you can deal with one vendor and one payment versus multiple lenders with multiple payments. As mentioned earlier, review your loan terms to determine if your loan is eligible for refinancing.
When you're in a bind, seek help
Unexpected things happen. If there comes a time when making payments to your loan becomes difficult, reach out to your lender immediately. Your lender may offer to refinance, reduce, or temporarily suspend your payments. Seeking help early can keep you in good financial standing with your lender and ensure you don't default on your loan.
Securing enough capital through business loans is vital to keeping your business afloat and scaling your business. Getting approval is just the beginning of your financial obligations, and a concise plan for repayment is essential to establishing good credit for your business and increasing your chances of securing more lending in the future. Your commitment is only as good as your payment history, so make it count!
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