April 4, 2022

5 best practices when taking out a business loan

Best practices when taking out a business loan

If you’re ready to take advantage of a new opportunity, a business loan can give you the funds you need. Once you’ve secured your financing, the next step is making sure you’re keeping up with your loan and maintaining good standing.

Here are some tips that our customers have found useful for staying on top of their business loan payments.

1. Start an emergency savings fund

This is just a good thing to do across the board. Set aside extra money every month that can act as a reserve fund you can dip into during a time of need. Let’s say that you took out a loan to grow your business. If something happens that prevents you from paying it back for even a month, having the safety net of an emergency fund can help and keep you in good standing.

2. Set up ACH payments

By setting up recurring automatic payments, your lender will pull the funds from your account when payment is due every month. This leaves the action on the institution. You, on the other hand, don’t have to remember dates or write checks or make manual payments online.

3. Consolidate your debt

Juggling multiple balances and payment dates can be time-consuming and costly. Using your business loan to consolidate business debt can simplify your finances—and help you better plan for the future—with one fixed and affordably low monthly payment.

4. Set auto-reminders to make payments

Even if you set up automatic payments, you can schedule due-date reminders for the year or until the last payment is due. If you set up this reminder for 7 to 10 days before your monthly payment is due, you can ensure you have enough money in your account to pay for it.

5. Ask about anything you’re unsure of

From the terms of the loan to its structure and more, be sure to ask your lender any questions you may have. No question is a bad question as it relates to your finances.

A business loan — whether used for working capital, debt consolidation, or startup funds — can help boost your professional endeavors. Want to find out what our financing can help you accomplish? Call our team to speak to a loan specialist today. Or you can try our free online Payment Estimator to see how low your monthly payment could be.