Business Credit & Capital No Comments

Savvy logo_a

Shocking as it may seem, most people do not start their businesses in the hopes that they will one day be able to spend their days focusing on accounting and loans. Still, this is a reality for anyone seeking to start or even maintain a business. While not everyone can be an expert on loans, there are certain things that you should know before accepting a loan agreement.

Borrowed Capital Cost

It may seem obvious, but many people fail to consider the borrowed capital cost, or total cost, on their loans. This includes not only the amount that is borrowed but the subsequent interest on the loan. When considering the total cost of a loan, there are a few factors to consider.

How long will you be paying off the loan? The longer it takes to pay off a loan, the more you end up paying interest. For some businesses, their best bet is to pay higher periodically and pay off the loan as soon as possible. However, if your business is not able to pay higher rates to pay off a loan more quickly, then you will have to accept paying more to the lender over a longer period of time.

This can seem discouraging, but it does not have to be. Paying more total money is unfortunate, but if your business can handle making the smaller payments, then you have to do what is right for the business. It may not leave the best taste in your mouth, but each business is different, so each approach to a loan is different. Consider these options when looking at loans, and always weigh the borrowed capital cost against the periodic payments that will have to be made.

Look at a Variety of Lenders

This is an important step that many skip over in a rush to get the loan handled immediately. While it may seem that many lenders are offering the same or similar deals, try to find those that stand out. A perfect example of this is Business Credit and Capital, or BCC.

BCC is a lender that specializes in smaller to medium-sized business. This means that they do not require an especially high credit score, but more than that, the way that they take out their periodic payments is unique and well-suited for newer businesses.

BCC does not view loans in the traditional sense. The money that they offer is an advance on the future revenue of your business, and they collect their payments from a percentage of the total revenue of the subsequent sales. This eliminates a lot of the worry of scheduled monthly payments, as it will always be a certain percentage rather than a concrete number.

If one month is not as profitable as others, there is no need to worry, because the same percentage will come out until the loan is repaid. For small business owners, this method is a lifesaver that many lenders will not offer. This is the importance of exploring your options and seeing what other lenders can do for you.

Know Your Business

The most important aspect of taking on a loan is knowing your own business and revenue. Be realistic about what you can expect to make and how you will be able to pay it off. If you are working with a small niche market that is not particularly wealthy, it may not be a good idea to make plans for high periodic payments. Customize your loan to what is best for your business. After all, who knows the needs of your business better than you?

Leave a Reply

Your email address will not be published. Required fields are marked *