Small business loans are great for getting the funding you need to launch or grow your business. But the terms of the loan come with an obligation to repay the loan in full and on time.
Here is a helpful guide to help you understand and manage your loan repayments.
You need to understand the terms before signing any type of loan agreement. This includes the length of the loan, interest rate, repayment schedule, and any other fees or charges that may incur over time.
You can read more about business loan terms and how they can vary here.
Being aware of all the terms will ensure that you don't get any surprises down the line and can better plan for repayment.
You must pay attention to all terms involved with the loan beforehand, so you know what to expect from repayment amounts and schedules.
You should track your repayments so you can stay informed on the balance and make adjustments as needed.
Establish a payment schedule. Figure out when you need to make payments and how much you will pay each month. If you have trouble making payments on time, consider setting up a payment plan with your lender.
Making additional payments is a great way to save money in the long run. This will reduce the amount of interest accrued over time, meaning more of your payment goes toward paying down the total amount. We do not charge fees if you wish to settle early.
Keep an eye on when payments will come out of your account so you are prepared and can avoid missed payment fees.
Repayments & Credit
Monitoring your credit is an integral part of maintaining good financial standing. Paying off loans can help improve your credit score, so check your score often and work on improving it if necessary.
You must also always make timely repayments, as late payments can negatively impact your score. If you default on one payment, you should contact your lender immediately to explain the situation and discuss options for getting back on track. However, you may incur late fees and other penalties if this is a recurring issue.
For this reason, you should only get a business loan if you are confident in your ability to pay it back.
By establishing a budget and committing to making regular repayments, you will be taking active steps to improve your financial situation.
The funder will set up a direct debit for you to make regular payments on your loan.
A direct debit is a convenient and secure way to pay your loan, as it automatically deducts the money from your account each month. This will ensure that your payments are made on time each month, and you won't have to worry about manually making payments.
There are some occasions where a lender will accept weekly, or even daily repayments - this will be explained to you when you get the loan.
A direct debit is set up by the lender so you do not have to make manual payments.
It is important to ensure you have enough funds available in your account for each repayment, as this will help prevent any late fees or other penalties. Keeping track of your payments and reviewing them regularly will ensure they are going through as scheduled.
If you don't want to make physical payments to the lender, you could look at a merchant cash advance.
With a merchant cash advance, the lender pays you funds directly and then claims the money back through a percentage of your future card sales. This can soften the blow of repayments as they come out of your sales rather than your bank balance.
Merchant cash advances are repaid through a percentage of future card sales.
You should set payment reminders so you are aware of when the money will be coming out and ensure there are enough funds to cover the payments.
With the right plan in place, you ensure you are repaying your loan on time, which gives you more financial freedom and helps you reach your business goals sooner.
By following this guide to repaying your small business loan, you can ensure that you are staying on top of your loan repayment and that you are keeping your credit score in good standing. With a little bit of effort, you can make sure that you are managing your loan repayment responsibly and successfully.
Your account manager will stay in touch to provide you with any useful information you need to know about your loan and the repayment process. If there are any changes made or updates issued, make sure to follow up with them quickly.
