Raising working capital is a challenge and many businesses have dealt with loan rejections, so congratulations on getting your business loan approved! Your newly acquired funds will no doubt help you reach your business goals.
The loan application process may have ended, but this is just the beginning of your business development journey. Without good loan management, the funds will deplete quickly. Here are four tips for better loan management.
1. Put the money in separate accounts
Hopefully, prior to loan application, you have already prepared a solid budget plan and have decided what important purchases to allocate your funds. Prevent yourself from spending misdemeanors by putting the loan funds in a separate account. That way, you won’t be tempted to spend the money on daily operational expenses and less urgent purchases.
2. Set up automatic loan repayments
Don’t ruin your credit score because of late or missed loan repayments. You will 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 borrowers to auto-repay their loans. Once the scheme is in place, you don’t even have to keep a mental note on repayments anymore.
3. 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 opportunities to lower existing costs.
4. 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 won’t affect your financial strategy. Don’t – it’s a slippery slope. Even small costs add up and can eventually lead to cash depletion. 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 funds.
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!
In need for funds? Check your eligibility now!