Getting a business loan can be the fuel your business needs to reach the next level of success. Joanne MacKean, a BDC Senior Account Manager, has loaned money to hundreds of businesses and with her many years of experience she often sees many entrepreneurs making the following common mistakes.
One: Borrowing Money Too Late
You may be tempted to finance your expansion projects from your cash flow. But paying for your investments with your own money can put undue financial pressure on your growing business.
Two: Borrowing Too Little
You’re right to be careful about how much debt you take on. However, low-balling how much a project will cost you can leave your business facing a serious cash crunch when unexpected expenses crop up.
Three: Focusing Too Much on the Interest Rate
The interest rate on your business loan is important, but it’s far from the whole story. What loan term is the lender willing to offer? What percentage of the cost of your assets in your lender willing to finance? What is the lender’s flexibility on repayments? What guarantees are being asked from you in the case of default?
Four: Paying Your Loan Back Too Fast
Many business owners want to pay back their loans as quickly as possible. Again, it’s important to reduce debt, but doing so too quickly can cost your business. That’s because you may leave yourself short of cash. Or the extra money you’re devoting to debt reduction might be better spent on profitable growth projects.
Five: Failing To Keep Your Financial House in Order
Messy financial records can leave you in the dark about how your business is performing until it’s too late to take corrective action. It can also make it difficult to approach a banker for a business lean because not only do you lack documentation, but you’ve also shown a lack of managerial acumen
Six: Making a Weak Pitch to Your Banker
MacKean says too many entrepreneurs are unable to clearly explain their company’s business plan, past performance, competitive advantages and proposed project. The result is a polite, “no, thanks.”
Seven: Depending on Just One Lender
Having a Relationship with just one financial institution can limit your options, especially if your business hits a bump in the road, MacKean says. “Just as you would diversify your suppliers or customer base, or your own personal investments, you want to diversify your lending relationships.”
We have personally used BDC in the past and have had a wonderful experience with the members of the Halifax, Nova Scotia branch offices.
If you need more information feel free to reach out to us directly and we will get you in front of the right people.
You can find our contact info @ www.blendernetworks.com