If you’ve decided that your business could use some financial aid, then you will most certainly want to get a business loan. That is the logical step to take when you realize that your company needs help financially. Trying to borrow from friends and family certainly isn’t a good idea, especially since we are talking about business investments and expenses. Those people around you are highly unlikely to have the amounts you need and, even if they do, they probably won’t be willing to lend it without any sort of a guarantee that they will get it back.
Money is a sensitive topic, which is why borrowing from the people around you is not a wise idea even when you need certain amounts for personal use. So, you can probably conclude all on your own why borrowing from them for business purposes is definitely a move that you shouldn’t make. Thus, the only thing you can rely on is a lån til bedrift, i.e. a loan for your company. It is a good thing that these exist, since most companies wouldn’t be able to grow without them.
The fact that these borrowing solutions exist certainly make things much easier for all the companies out there. Yet, a lot of business owners are tempted to make random steps and choices when they decide to get business loans, and that can end up costing them a lot. I definitely understand that you want and need to get the money as soon as possible, but the truth is that making uninformed decisions based on your gut feeling is certainly not the right thing to do in these cases.
There are, of course, a lot of wrong things you can do here. What you should do is get acquainted with those wrong moves, so that you can do your best to avoid them when you begin your process of applying for business loans. There is no doubt in my mind that you are not keen on making the wrong moves and doing the wrong things during this process, which is why I believe you’re ready to do the learning.
8 Things Not To Do When Getting A Bedriftslån
If that’s the case, then you’ve come to the right place. To put everything as simply as possible, I am now going to list some of those things that you absolutely shouldn’t do when getting business loans. Thus, you’ll be warned about the wrong moves that you could easily make if you’re not careful and attentive enough. Once you are warned about those, you’ll undoubtedly try to be more careful and thus make all the right moves and get the best business loan, which is exactly what you want. It’s time for you to be warned.
- Deciding Right Away
I have briefly mentioned this above, but I do believe that it deserves to be explained further. While there is nothing wrong in being interested in getting a loan quickly, the simple fact is that you should never make rushed decisions here. If you make such decision, it is likely that they will be influenced by your need to get money quickly and not by actual business loans information that you’ll get from certain lenders. Ultimately, this could all result in agreeing on some rather poor terms, and you’re bound to regret that at one point or another. So, patience is important.
- Waiting Until It’s Too Late
What if I told you, though, that too much patience can also harm you? I know that this may sound a bit contradictory, given what I have said above, but it is actually true. There is such thing as too much patience, because it can lead to a lot of financial pressure. For instance, if you’ve been planning to fund, say, expansion costs from the actual company cash flow, you could easily end up putting a lot of strain on your company’s financial situation, which will ultimately lead to you having to get a loan as quickly as humanly possible.
When you wind up needing money that quickly, you’ll essentially be borrowing from the position of weakness, meaning that you won’t have time to explore the options and negotiate the terms, and meaning that it will be easy for certain lenders to take advantage of your situation. This doesn’t really sound fun, does it? Well, it certainly shouldn’t! So, think twice before deciding to fund something from your cash flow, as that could lead to future financial pressure and some wrong and hasty lending decisions.
- Not Checking Your Credit Score
Everyone talks about credit scores in the financial industry. Thanks to that, everyone outside the financial industry also knows what a credit score is and how important it is for the actual processes of getting either personal or business loans. If you didn’t really know that your credit score can affect your business loans terms and solutions, it is time for you to understand that it does.
Of course, in this case we are talking about your business credit score. While it is sometimes possible for owners to get a loan even with a poor score, you will have much higher chances if the score is higher. So, don’t forget to check the score before applying and take any steps towards improving it if necessary. This will increase your chances of getting the perfect business loans solutions.
If you’re worried about taking some more wrong steps in the process, this should help you avoid some as well: https://www.forbes.com/advisor/in/business-loans/things-to-avoid-while-applying-for-a-business-loan/
- Not Borrowing The Right Amount
When the time comes for you to actually apply for your lån til bedrift, you will need to decide on some rather important things and let the lender know your decisions. Unsurprisingly, the amount you want to borrow is one of those factors. Not borrowing the right amount, though, can get you in trouble, which is why you should give this a lot of thought and do all the necessary calculations before deciding.
Which is worse, borrowing less or borrowing more money than you need? You might be tempted to say that borrowing more than necessary is worse, since that does sometimes sound like the logical answer, but it is actually the wrong answer. Sure, you do have to be worried about how much debt you will take on, but borrowing a lower amount could actually turn out to be more damaging to your business. If you do that, you could be unable to finish the project that you need the money for and you could put even more financial strain on your business in general. While calculating, always keep in mind that certain unexpected expenses are bound to arise and make sure not to borrow less than you need.
- Focusing Solely On The Interest Rate
If you asked anyone what the most significant factor to look into is when getting loans for businesses, 99% of people would most likely say “interest rates”. I am not going to argue against the fact that this is a rather important factor to consider, but it definitely doesn’t tell you the whole story. So, in short, all the factors matter equally, and it is the combination of a good interest rate with other good terms that actually makes for great loans for businesses. This means that you should never focus solely on the interest rates and ignore the other factors.
- Forgetting To Check With More Lenders
When you are aiming at getting your loans for businesses quickly, you could easily end up working with the first lender that you stumble upon. If you’re lucky enough, that first lender could be offering amazing terms. Since we are talking about your business here, though, you certainly don’t want to rely on luck. Great businesses rely on facts when making any kinds of decisions and you need to keep that in mind at all times.
So, another wrong thing you can do is fail to check your options with more lenders. They will all have different things to offer and your particular task is to find the ones that offer the best deals. If you’ve been reading carefully, then you know that the best deal consists of the best overall terms, including, but not limited to, interest rates. Take all the time you need to explore and compare those options, as that’s the only way for you to get the best deals.
- Borrowing From Shady Places
There are, unfortunately, some rather shady places out there that will try to trick you into getting a loan from them while not having your best interest in mind. Sure, all lenders need to make money by providing you with this service, but some will definitely want to take things too far and basically rip you off. So, you should never borrow from those shady places, because you cannot even begin to fathom the ways in which they can trick you. Read some reviews to check their reputation and only choose those lenders that are established as reputable and trustworthy on this particular market.
- Rushing To Pay It Off Early
The idea of paying your debt off early certainly does sound appealing and I understand why. There is actually nothing wrong in doing this if you are sure that you can do it without damaging your business. If, however, you decide to do it just because you don’t like the idea of being in debt, you could leave your business short of cash, and we all know that this can further lead to operation issues. In conclusion, don’t rush to pay the debt off early if you’re not sure that you can maintain a good cash flow in your company even after doing that.