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Business banking: Do you really need a loan?
There are always risks involved in borrowing money,
so you should carefully analyze your need for it first.
Here are some points to consider when deciding whether
you really need a loan:
- Make sure it's capital you lack, not good cash-flow
management.
- Borrow in expectation of needs, not in desperation
-- or you may have to accept expensive terms.
- If your business is in transition to its next life
stage, you probably do have a need for cash to foster growth.
- Have a specific purpose in mind, and be prepared
to tell a lender exactly how the money will be used.
- Gauge the health of your industry; it will make
a difference in how favorably your loan proposal is viewed.
- Consider establishing a good credit relationship
with a banker by opening accounts or taking out small lines of
credit, but don't get into debt without a plan for paying it back.
- Make sure your business plan is up to date and
the loan you seek is reflected in the plan. Lenders will want
to review the plan.
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