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Managing Your Business Loan Effectively


Business finance can help you build your business faster and increase profits. But its important to manage your loan efficiently and ensure you choose the right option for you.

Whether you’re buying a business, expanding or simply looking for cash flow over the quiet periods you may need a business loan to help at some point.

Step 1. Work out what your needs are

Plan ahead and create detailed profit and loss and cash flow forecasts so you can calculate exactly how much extra capital you’ll require and how long you’ll need to pay it back.

If you’re borrowing for an existing business, it’s also a good idea to analyse your month to month cash flow over the last few years, so that you can identify any seasonal variations. That way, you can put in place a safety net, such as an overdraft, ahead of time, and shape your repayments to match your resources.

Step 2. Choosing the right loan for your business

With a variety of business loans in the market it’s important to choose the right one to ensure you achieve the greatest benefit from it.

If you are looking for short-term cash flow you might consider an Overdrafthowever a Commercial Loan would be more suitable for long term capital. The Mutual can help you find the right option for you, simply contact us today for more information.

Step 3. Organise finance with The Mutual

To apply for a loan, you’ll generally need some documentation to support your application. For an existing business this could potentially be a past tax return or a strong business plan and financial projections for a new business.

If you’re applying for a business line of credit, business loan or overdraft, you’ll also need some form or security, usually a residential or commercial property.

How to use a Business Loan more effectively

  1. Avoid buying long-term assets out of short-term cash flow, or you could starve your business of the cash it needs to keep running from day to day.
  2. Ensure the life of the asset you are financing matches the life of the loan so that you can pay it off from the extra revenue that asset produces.

Speak to a Financial Planner

The Mutual can arrange experienced Financial Planners who can help you choose the right finance solution for your business.

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