What to Consider When Your Lender Offers You Another Loan?

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WHAT TO CONSIDER WHEN YOUR LENDER OFFERS YOU
ANOTHER BUSINESS LOAN
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Mostly short-term lenders offer borrowers another
loan after their business loan is repaid about
50. It can be enticing to get your hands on more
cash. But how do you know whether you should take
it or not?
If youve been working with a lender for some
time and had a history of trustworthy repayments,
its not surprising that youll receive another
offer of more capital in form of a small business
loan. Remember, lenders make money when they
offer you another loan, so it might never be in
your best interest to accept another loan offer
from the lenders. However, before you accept the
offer, ask yourself these six critical questions.
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However, before you accept the offer, ask
yourself these six critical questions.
Are other lenders offering better loan deals?
Does the loan makes financial sense for your
business?
Has earlier financing influenced your business
growth?
Are new loan terms desirable or affordable?
Does this another loan offer suits your needs?
Do you actually need it?
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Do you actually need it?
Unless youll have a explicit plan of how to use
the money, dont hurry in getting your hands on
more cash. Before you accept it, make sure
understand what will be the expected return on
investment, and whether the cost is worth that
ROI. If you need some extra cash for your
business, its better to secure a business line
of credit, where youll only pay when you
actually draw on the credit line. You can also
get business credit cards to help build your
business credit.
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Has earlier financing influenced your business
growth?
Successful repayment of a loan helps in improving
business credit score. This not only assist in
your fundability, but also aid in improving your
odds of getting a loan at better rates and terms
in the future. You should also evaluate how
financing had impacted your business when you
first borrowed it with bad credit. Making timely
loan payments and in fill will help improve your
chances of securing desirable financing
opportunities in the future.
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Does this another loan offer suits your needs?
Before accepting cash for your future endeavors,
weight your needs first. You probably can use
cash to fulfil your long-term purposes, like
buying new equipment or commercial real estate,
but quick short-term infusion of cash isnt the
suitable decision to finance long-term plans.
Keep in mind that you should compare your needs
with the loan terms.
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Are new loan terms desirable or affordable?
After paying your first loan up to 50, you can
expect desirable or at least affordable interest
rates and terms the next time you apply for
financing. But, what if the lender is reluctant
to provide flexibility in the terms of the
outstanding portion of your loan? Whether the
additional loan can be used to repay the original
loan without any prepayment penalties?
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Does the loan makes financial sense for your
business?
While reviewing alternative lenders short-term
loans, comparing loan costs and terms can be
sometimes perplexing. With different repayment
terms, fees, and non-standard interest rates
encumber to evaluate what youre actually paying
and how cash flow is influenced by the
repayments. However, putting every loan into APR
can display differences between their interest
rates and fees, but its not always in the cards.
You can use various loan calculators to done the
math, but if you still unsure, get help from
accountant to inspect whether the loan makes
financial sense for your small business or not.
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Are other lenders offering better loan deals?
Even if everything is up to your satisfaction,
your current loan terms might not be the best
ones you can get. New financing opportunities
become available in terms of lower interest
rates, larger amounts, and better terms as your
business credit score starts building. Before
signing for any loan, make sure youve done
thorough research and compare different lenders
terms and rates to determine what other lenders
have to offer before signing on the dotted line.
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The Bottom Line
Eventually, keep in mind that the lender didnt
offer you another loan just to be nice! Lenders
are in the business of making money from loans,
and when you borrow more, they make money
more. So before accepting another loan offer, do
the job to evaluate whether its make sense for
you or not.
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