When you’re looking to expand your business, for example by launching a new product, moving to larger premises or growing your team, a business loan could help to fund your ambitions.
Before making any decisions about borrowing to expand, you’ll have to consider
some key questions, for example:
- How much money do you need to borrow, and what are
the expected costs of implementing your expansion plan? - Does your business generate enough income to cover
the loan repayments and interest? - Is there strong demand for your new product or
service? - Does your management team have the expertise to
handle the challenges of expansion? - Are there any potential risks, such as changes to your
market or supply chain?
Developing a detailed business plan, including financial projections and
market analysis, will help with your decision. An accountant or financial
adviser could help you to analyse your plans.
Before taking out a business loan, always consider the following points:
- Repayment
terms: The length of time to repay a
business loan can range from a few months to several years, so you’ll need to
be mindful of the need to make ongoing monthly repayments during the term of
the loan. - Personal
guarantees: If you provide a personal
guarantee for a business loan, you’re personally liable to repay the debt if
the business cannot do so. It’s important that you consider getting independent
legal advice to ensure you understand the terms of any personal guarantee. - Terms and
conditions: If you breach any of the terms
and conditions of a business loan, this could affect your business’s ability to
borrow money again. For example, lenders will generally inform credit reference
agencies when repayments are missed, so it’s important to understand the terms
and conditions before you take out a loan and make sure you keep up with
repayments.
A business loan can be a valuable tool to help expand your business.
However, it’s important to make sure this is the right decision for you. If
you ever find that you are in financial difficulty, you should let your lender
know as soon as possible so they can work with you to find the best solution.
Find out more about business loans at LendingCrowd.
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