It would be great to be Uncle Scrooge's nephew and always have the necessary capital available for that project that is waiting in the oven of your company. Unfortunately, Uncle Scrooge is a figment of Walt Disney's imagination, and in real life it is a little more difficult to get capital. Although we can save or wait to win the current competitive fund, sometimes the opportunities are now, and a loan begins to be an option to consider...
We don't want a loan to be synonymous with suffering and headaches for you, so we'll leave you with some basic things you should keep in mind when knocking on the banks' doors:
What are your projections for taking out this loan?: Before asking for a loan, it is crucial that you sit down with paper and pencil-abacus-calculator-Excel-Organizame software to review your cash flows. If you want to invest, it is surely to generate better returns in your business, either through more sales or lower costs through more efficient processes. You need to review how much you think these improvements will be. Questions like “Will my income increase?” “Will my variable costs decrease?” are key before jumping into the deep end with any project.
Get a quote, get a quote! Even if you are in a hurry to get that little money in your business, it is important that you get a quote and see your options in the market. Some things that you should analyze when you go to the bank are:
The famous APR: Note that we are not talking about a state-guara philippines country code nteed loan, but rather the Annual Equivalent Charge. This figure, expressed as a percentage, tells you the total annual cost of the loan in relation to the initial amount you requested. It allows you to compare different options based on the golden rule: “For the same term and the same amount , the loan with the lowest APR will always be cheaper.”
The installment: It is very important that you evaluate whether, after investing your cash flows, you will be able to assume a fixed monthly cost associated with the installment of a loan. We do not want you to be up to your neck in paying it off month after month after taking out the loan... Or do we?
Notary fees , insurance, taxes or other associated expenses: It is very important to keep in mind the indirect costs associated with your credit. Many times we see that we can pay the fee but we do not consider that the procedure has an additional associated cost, or that sometimes the liability insurance is mandatory.
Do you meet the requirements to take out the loan that best suits you?
Sometimes we find good options but it is still not feasible to take out the loan… Why? Because different banks offer different financial products associated with different requirements. Some banks require a certain age of the business, or a certain minimum demonstrable income. Before getting excited about an option, ask carefully if you meet the requirements and what documents you must present.
If you think that a loan is what you need to finance your project, we recommend that you ask and re-ask the executive who assists you about anything you do not understand or consider relevant. Read the contract and the “fine print” very carefully, making sure that you fully understand the conditions agreed upon in what you are signing. It is better to be rigorous than to get into a bad deal!