To Loan Or Not To Loan? – Which Is The Right Choice For Your Business
Taking out a loan for your business, such as from a business loan philippines company, can never be a choice to be taken lightly – whatever choice you will have either a positive or negative affect, and sometimes they can change the fate of your business altogether. Any choice, particularly a financial one, should be researched, questioned and reviewed multiple times before you make any commitment.
This said, sometimes you need a solution quickly and don’t have time to spent weeks researching. In those instances, you need to compare the available options with the help of sites online and a straightforward ‘pros and cons’ list to help you to see the choice in black and white. Loans are one such thing where there may not be time to review the decision for long, as they can be used to save the company.
Loan Pros
No Ownership – unlike an investment, a bank loan won’t give the bank any ownership over your company. It will still be yours to control as you will, with no limitations set by the bank.
Convenient – banks are plentiful and control most of the world’s finances. The money is there, and so is the advice. You can walk down a high street and pass more banks than you can count on both of your hands. This variety of banks means a large variety of loans.
Variety – as previously stated, there is a whole host of different loans that you can choose from. Varying in amounts, interest rates, payback times and other such things. You can also contemplate taking out a personal loan instead of a business loan – just remember that you, and not your company, is responsible for that loan.
Schemes – many banks have start-up schemes for budding entrepreneurs, with many added benefits to the initial loan. And just because you have owned your business for a little while, doesn’t necessarily mean that you are out of the running. Often such schemes have conditions that will apply to new projects and new business sectors.
Interest – any interest on loans (in most cases) is tax-deductible.
Loan Cons
Interest – loans for smaller and newer businesses are usually accompanied by high interest rates. Moneysavingexpert.com gives a detailed description on understanding how interest rates work. A smaller or new business is at more risk of failing, and so a higher risk for the bank, the high interest rate is to encourage you to pay it back quicker.
Small Loans – larger loans are hard to come by for smaller/new businesses for the same reason as why interest rates are high; it’s risky. If a company fails, the bank has less chance of getting their money back.
Long Applications – applying for any loan can be a lengthy process, but when the payback depends on the success of a business, which may not have proven itself by making a profit, the applications can take longer and be much more thorough.
