It's not easy to get a business loan, but if you own your own small business, you will want to look into this sooner not later. It really is uncommon for a business owner not to be completely motivated by what she or he does for a living. That's one of several great things about owning your own business. A lot of people get a feeling of dread when they wake up on Mondays when they realize that it is time to get ready for work. You don't think twice about working nights and weekends, and Monday's don't bother you, because you love what you do so much. It's not only your source of income, it's your life.
Does your business run like its own entity, or is there a blurry line between business and personal things? It's easy, and tempting, to want to use the company checking account like a personal account, but you ought to keep expenses separate. At some point or another, you'll probably need to look into getting a small business loan. This is when it's especially important that you've been keeping your books properly, and there is a very clear line between personal and business. If you need some cash for something that's not business-related, you should avoid taking a business loan at all costs.
One of the most important parts about borrowing money, especially if your business is concerned, is booking everything properly and making your payments on time. Also, don't forget that it's going to cost you money in order to borrow it. If you are going to borrow money, it ought to be for a purpose you can generate income off of, to counterbalance the cost of the funding. Why pay 10% to borrow money if it's just going to sit in an account earning 0.05%?
If you follow that advice, you should end up in this situation, but if you don't, and you can't make timely payments, you could end up in a great deal of trouble, as most traditional funding sources, particularly those that offer small business loans, will demand that you personally guarantee repayment of the loan, as well as put up collateral to back it. This is where, you might think, it's convenient to have the personal liability offered by many of the legal entities available to choose from today. That, however, is not the case. Personal guarantees on small business loans supersede any limited liability that you get from your status as an LLC. The bank will do whatever it has to as a way to minimize its losses on your loan. Even if it means pursuing your house or your car. They may even liquidate your company assets if it will get them repaid.
There are certainly a lot of reasons to like borrowing money for the business. You just need to be careful about over-utilizing them, or coming to rely on them when you could turn to a number of other methods to make some cash flow available, even if its just by cutting some unnecessary expenses. That's always a good practice too, to look over your profit and loss statement and have a look at your expenses, and deciding which ones you can maybe do without.
Does your business run like its own entity, or is there a blurry line between business and personal things? It's easy, and tempting, to want to use the company checking account like a personal account, but you ought to keep expenses separate. At some point or another, you'll probably need to look into getting a small business loan. This is when it's especially important that you've been keeping your books properly, and there is a very clear line between personal and business. If you need some cash for something that's not business-related, you should avoid taking a business loan at all costs.
One of the most important parts about borrowing money, especially if your business is concerned, is booking everything properly and making your payments on time. Also, don't forget that it's going to cost you money in order to borrow it. If you are going to borrow money, it ought to be for a purpose you can generate income off of, to counterbalance the cost of the funding. Why pay 10% to borrow money if it's just going to sit in an account earning 0.05%?
If you follow that advice, you should end up in this situation, but if you don't, and you can't make timely payments, you could end up in a great deal of trouble, as most traditional funding sources, particularly those that offer small business loans, will demand that you personally guarantee repayment of the loan, as well as put up collateral to back it. This is where, you might think, it's convenient to have the personal liability offered by many of the legal entities available to choose from today. That, however, is not the case. Personal guarantees on small business loans supersede any limited liability that you get from your status as an LLC. The bank will do whatever it has to as a way to minimize its losses on your loan. Even if it means pursuing your house or your car. They may even liquidate your company assets if it will get them repaid.
There are certainly a lot of reasons to like borrowing money for the business. You just need to be careful about over-utilizing them, or coming to rely on them when you could turn to a number of other methods to make some cash flow available, even if its just by cutting some unnecessary expenses. That's always a good practice too, to look over your profit and loss statement and have a look at your expenses, and deciding which ones you can maybe do without.
About the Author:
If you need to get a small business loan, there are a lot of things to take into consideration. Your power to repay it, for one thing. Surprisingly, people borrowing money without contemplating how they'll pay it off is something that's hurt our economy quite a bit.
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