Does My Business Really Need a Loan?
Questions you should ask before getting a loan for your business

Does My Business Really Need a Loan?

Getting a Business Loan Can Be a Good Thing

In order for a company to expand, sometimes taking a business loan is necessary. While it’s true that not every reason is a good reason to go into debt for your business, that doesn’t mean that good reasons don’t exist. If your business is ready to take a leap, but you don’t have the working capital to do so then taking the loan would be a good step.

Sometimes something as little as giving your company a face lift can add to the overall performance and patronage rate.

While Africans do not have the culture of borrowing, it is almost impossible to build an empire without taking a loan at some point. Popular entrepreneurs like Dangote, Innoson have taken loans at some point to grow their company. In order to reach certain clientele or meet up with incoming demands, taking a loan may be necessary. A few years ago Innoson borrowed the sum of two billion naira from Guarantee Trust Bank. Now His Company is ranked among the top companies in Africa because of growth.

You know your business needs a loan when you get to that point where you just know you’re not living up to your potentials and you have a strategy that would be better implemented if you had more money. Taking a loan without a strategy on how to use the money borrowed will eventually lead to a lot of bad debt. So it is advisable to only take a loan for your business when it is absolutely necessary and you are certain that the loan would lead to turnover that would help pay off your debt. Taking a loan can have positive outcomes and also have negative outcomes. Negative outcomes occur when you are unable to pay off the loans and in cases where a collateral was required, the collateral is seized and sold to get back the money collected from the bank/financial institution. A positive outcome on the other hand occurs when you get your loan, you are able to pay off early and every one stays happy.

Creditville Limited loans do not require collateral, they are easy to repay and extremely flexible. Collateral are substituted for guarantors which makes it easier to access the loan.

Questions you should ask yourself before taking a Business Loan:

  1. Can I get the money I need from another source:

Before taking a business loan, you should ask yourself if you can get the money from somewhere else other than a bank or financial institution. If you can get money from friends and family or selling off some equipment then you probably shouldn’t go through the process of getting a guarantor or a collateral to get a loan.

  1. Is my business structure good enough to get a Loan:

To get a loan, you should check the structure of your organization. If the structure of your organization is not air tight then there is a possibility that productivity in your organization would not be stable. Having a proper structure and work environment ensures that productivity is always at its maximum which in turn enables conversion.

  1. Do I have a collateral or guarantor:

Some banks or financial institutions require guarantors while others require collateral. A Collateral is usually of high value and must be able to cover your loan if sold. Financial institutions usually require that you provide a federal government staff, a banker or a staff of a blue chip company. In which  case you would have to get someone with such profile to stand in as your guarantor. Getting a guarantor can be difficult because while you may know a lot of people who fall into such category, they might not be willing to guarantee you. Standing in as a guarantor is a big deal and even if people are close to you, they may not be willing to pay off your debt if you run into any. Several other banks or financial institutions require reasonable collateral before they can give out a loan of certain amounts. Before starting the process of getting such loans, you should ask yourself if you have the necessary loan collateral and if you are ready to put it up. You might actually lose the property if you cannot pay off.

  1. Do I have enough income flow to offset my loan:

Stable income flow is very important in taking a loan. Most financial institutions or banks would not give out a loan to you unless you meet certain requirements, one of which is that your income flow is stable enough to meet up with the repayment plan. Doing this analysis would help you know if you are eligible to take a loan.

  1. Can my business grow with or without the loan:

Growth is extremely essential and while most people choose to play it safe, taking risks is a part of running a business. In order to grow, risks must be taken and while it is not always rewarding, it is extremely essential. Before borrowing, you should ask yourself if taking a loan is something you should do. The common reason why a business should take a loan is growth. If you can get the kind of growth you want without getting a loan then a loan is probably not a necessity. If your business can grow at a comfortable pace without getting a loan then you should probably wait it out. Take things slow and move without having any debt. If your business cannot grow without at the pace you want without you should probably should take a loan.

  1. What are the advantages and disadvantages of taking a loan:

The advantages and disadvantages of taking a loan are peculiar to each business. Taking a loan is generally advantageous but if you invest the money you borrowed and your company gets into a fix then you wouldn’t be able to pay off and that would lead to the financial institution taking alternative measures to get back the money you borrowed. On the other hand, if your business does well and is able to pay off the debt then that is an added advantage.

In conclusion, getting a business loan isn’t something that should be taken lightly and much thought should definitely be given to it and if at the end of the day you business can accommodate the loan, then by all means feel free to contact Creditville Limited because we make getting a quick business loan as easy as possible.