Chances are you know a lot more today than you did when you first started your business. With that knowledge comes power. The power to make better decisions. Start by determining if the financial decisions you made initially still hold up as being the best for you and your business. It might be time to refinance your loans, research credit card options, change merchant services (like payroll), or switch financial institutions.
Start with reviewing your rates. Can you refinance your loans to a lower rate? According to the U.S. Small Business Administration, rates on commercial and industrial loans have remained below 5% since 2009, while personal credit cards tend to have much higher rates, at around 13%. Are you using your credit card to fund your expenses? If so, you may benefit from taking out a loan with a lower rate. The only way to find out is to research rates and speak to your current business financial partner. If you currently do not have a business financial partner, Avadian has several that would be glad to speak with you and help you find the best program that meets your needs.
It may be time for a loan. Have you funded your business through sources other than loans? It’s not surprising for young business owners to use their personal savings or credit card to start their business. This is because they know lenders are leery of lending money to new businesses. They fear they won’t get approved, and who wants to start out their business with rejection? But with a few years under your belt, it might not be as challenging.
When talking to Blake Watkins, an Avadian Business Services Loan Officer, he believes many business owners are too concerned with how much they will qualify for and usually approach lenders asking that question first. Instead, he recommends taking the time to explain where you’ve been and where you want your business to go. Simply filling out an application and hoping it gets approved is doing a disservice to yourself. In the commercial lending world, the story and the plan matter, and the more information you give, the stronger you build your case for the underwriters approving your loan.
Know your loan options. Another common mistake young business owners make is they often apply for a line of credit for business expenses rather than the appropriate loan type for their needs. Most of the time, they will use a line of credit to purchase vehicles and equipment when a term loan would save them a lot of interest in the long run. If that’s where you currently stand, consider applying for a term loan for those purchases. Take time to understand your different loan options. It could save you money, and you can utilize your line of credit for other needs, as explained in our next bullet.
Is cash really king? If you tend to use cash for all of your business’s expenses, you may want to consider if a revolving line of credit is a better option. You can withdraw from it whenever necessary and at a low rate. This frees up your cash flow for other, more important needs.
Be treated like the boss that you are. While reviewing your current financial situation, don’t just look at the numbers. Instead look at the merchants, lenders and financial institutions you use. Are they giving you their all? Don’t focus on just getting the best rates and fees. Look at the big picture...at how you are treated. Do they view your business as small potatoes or can they see your vision and potential for greatness? If it’s the latter, they will work with you to help you grow and seek out solutions that make sense for you and not their bottom line.
Reviewing your current options and comparing them to others can be time-consuming, but as the saying goes, “Rome wasn’t built in a day.” If you want your business to grow into an empire, then don’t be afraid of change. Even one small change can make a big impact.
Looking for more advice for your growing business? Download our free eBook, Taking Your Business to the Next Level.
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