A loan can be your saving grace as a small business owner but you have to shine your eyes if you plan to take one. Securing a loan can seem confusing or difficult so this piece will break down 5 important questions you should ask before taking one.
(If you do not want a case of “had I known?” after you take a loan, then this article is definitely for you.)
How much do I actually need?
Sis, do you know how much you actually need to take your business to the next level? When last did you take a look at your books? A detailed look at your books will help you determine how much you need and where to put in the money. If you are not very knowledgeable about finances, get someone you can trust to help you take a look at your books and advise you.
What is the interest rate of the loan I am taking?
You need to be aware of what the interest rates are for any loan you plan to take. No matter how urgently you need to take a loan, you should never skip the interest rate calculation. Sit down and decide what you can realistically pay as an interest rate. Do not take a loan with an interest rate that will give you sleepless nights, sis.Make sure you do not take a loan with an interest rate that will give you sleepless nights, sis. Click To Tweet
What am I willing to put down as collateral?
A good number of loan offers on the market will require you to put down collateral. Collateral is usually an asset that you forfeit if you are unable to pay back the loan during the stipulated time. While most offers that require collaterals have a lower interest rate, it is not advisable to take this route if you don’t think you can pay back within a certain time.
How long do I need the money for?
Asking this question will help you determine if you need a short, medium, or long term loan. A short-term loan requires you to pay back the amount borrowed and the interest in under a year. A medium-term loan requires you to pay back in 3 to 10 years while a long term loan requires you to pay back within 20 years.
The FCMB BOI Gender Loan is a great example of a medium-term loan because, at an interest rate of 13% per annum, it requires you to pay back in four years.
Where can I find the best loan offer for my small business right now?
When looking for the best offer for your business, be careful not to jump at the first offer you find. Some loan offers are specifically created to serve women-owned businesses like yours. A great example is the short FCMB Zero Interest Loan that helps you address urgent financial needs without saddling you with a high-interest rate or in fact, ANY interest rate at all!Need a business loan quickly? The FCMB Zero Interest Loan helps you address urgent financial needs without saddling you with a high-interest rate or in fact, ANY interest rate at all! Click To Tweet
Take your time to really answer the questions above. Review the loan options you find, and evaluate them with your business needs in mind. If you can, walk into the bank or call to ask further questions. Taking these steps will help you make the right choice.
This article is sponsored by the First City Monument Bank (FCMB). FCMB is passionate about empowering female entrepreneurs, helping them build their businesses, and improving the overall success rate of businesses owned or run by women.