Congratulations on your approved business loan! Raising working capital is a challenge and many businesses must deal with loan rejections, so once again: congratulations! Your newly acquired funds will no doubt help you reach your business goals.
The loan application process may have ended, but now starts the journey of developing your business. Without good loan management, the funds will just pass by. Here are four tips for better loan management.
Put the Money in Separate Accounts
Hopefully, prior to loan application, you had already prepared a solid budget plan and had decided what important purchases to allocate the loan money on. Prevent yourself from spending misdemeanors by putting the loan money in a separate account. That way, you won’t be tempted to spend the money on daily operational expenses and less urgent purchases. Place the loan funds somewhere other than your primary business checking account. Even better: separate the funds into accounts in different banks so you’ll think twice before transferring the money since there are additional costs to consider.
Set Up Automatic Loan Repayments
Don’t ruin your credit score because of late or missed loan repayments. You’ll find it more difficult to borrow money in the future. To prevent this, set up an automatic repayment scheme – most lenders have an online banking system that allows borrows to auto-repay their loans. Once the scheme is in place, you don’t even have to think about it anymore.
Carry on Cutting Costs and Planning Your Budget
Continue to save money, trim your budget, and plan for your business’ future. While the approved loan funds make it easier for you to make purchases, spending should go to expenses that will help your business grow or increase company productivity. Keep on anticipating future funding needs and searching for more chances to lower existing costs.
Don’t Spend Just Because You Can
Perhaps you have a small expense that can easily be covered by your newly acquired loan money. Maybe you think that spending a bit of the money here and there won’t affect your financial strategy much. Don’t – it’s a slippery slope. Even small costs add up and can eventually get you short on cash. Have good operational control of your funds. Make sure you give someone trustworthy the authority to release funds. If possible, give yourself access to monitor the flow of loan money.
Getting your loan approved is hard. Managing your approved loan to achieve your dreams of company growth is even harder. Be disciplined, be vigilant, and be careful with the money. Good luck!