How to manage small business loan repayments
A small business loan is one way to access that cash. Follow these tips to ensure you’re putting your best business foot forward when it comes to getting the most out of your small business loan.
Manage your cash flow carefully
Cash flow is important to the success of any small business – this you know. So it pays to keep it front of mind in the good times, and the bad, especially when you have loan repayments to consider. Keep a close eye on it by:
- Issuing invoices on time – the earlier you invoice, the earlier you’ll get paid.
- Regularly updating all other accounting and reporting – this will ensure you’ll notice any issues sooner and have them fixed faster.
- Building a cash reserve, if possible – it’s always good to have something to fall back on should the unexpected happen. It will also stand you in good stead during seasonal slumps.
- Projecting your cash flow well in advance – a cash flow calculator tool will be your best friend in this.
Get ahead of the game at peak times
So, business is booming? Great news. And while it may be tempting to celebrate, now’s the ideal time to consider paying more towards your loan. After all, it’s a move that will save you a significant sum of money down the track.
Let’s take Alison, for example. She’s a restaurant owner, has a $50,000 small business loan that she’s paying off at a rate of $600/week over 1 year and 9 months. Her business is doing well and she could pay more, but she’s just cruising at the agreed rate.
Alex, a mobile handyman, has a $50,000 business loan that he’s paying off at a rate of $600/week over 1 year and 9 months. His business is booming and he decides to add $200 to his repayments. This saves him $1,000 and he pays the loan off 5 months early.
Note: These are examples only and general in nature.
Keep a strong credit score
Good credit makes life much easier for a small business owner. Having a great credit report will open up more options when it comes to accessing finance, and has the potential to save you money in repayments.
Build and maintain a good credit score by:
- Scheduling reminders to ensure bills are paid on time.
- Limiting repayments by consolidating your credit cards.
- Keeping a close eye on your credit cards by not hitting the limit.
- Going over credit card bills with a fine-tooth comb so you can address any errors.
If your business is ready to take the next step, talk to Prospa today on 0800 005 797 or apply online for a small business loan.
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