Business loans are vital for many small businesses for a variety of reasons. A loan can help you fund new operations, expand your reach, take on profitable jobs, purchase needed equipment, and cover expenses until clients pay their bills.
However, maintaining your business loan or loans in good standing is just as vital as securing it to begin with. If you fail to pay on time, wind up in collections, lose access to credit lines, or receive judgments, it could seriously impact the company's ability to earn an income.
With that in mind, how can you ensure that your loans are paid in a timely manner and ward off any payment troubles? Here are four key ways.
Read the Fine Print. Before signing up for a loan, read the entirety of the agreement and its terms carefully. Familiarize yourself with your rights and responsibilities, including exact payment amounts and dates as well as grace periods and penalties.
Communicate Regularly. Check in with the loan institution on occasion to make sure that everything is fine from their perspective. Ask them to confirm that all payments are up-to-date and your accounting records match with the lender's information. Update your contact information and ask about any specials being offered that might reduce your interest rate or otherwise reward you for good payment.
Set Reminders. The best way to be certain that loan payments are made on time is to have them paid automatically. If you do opt for this method, ensure that enough money is always in the account to make the scheduled payment on time and without incident. If you choose to make manual payments, automate reminders to yourself or your bookkeeping staff to make the payment before the due date.
Be Honest About Difficulties. If you do start having trouble making any payments, be proactive with the lender. Lenders generally have a few ways to help out a debtor business that needs a little more time. You might be able to skip a payment or move your due dates to a better time in your monthly business cycle. There might be an option to refinance or lower the interest rate as well. The more you discuss alternatives while still in good standing, the better chance you will have of coming out unscathed.
The better you plan ahead for loan payments and any challenges that arise in making them, the easier it will be to keep your business loan current and timely. And then you can focus on the more important business of boosting your company's profit margins. Contact a business loan provider today in order to learn more.