While some of us perform better under pressure than others, we all know that making critical decisions while under duress is a bad idea. And when it comes to your small or mid-sized business, facing a daunting cash crunch certainly qualifies as extreme duress – because it means the very survival of your business is at risk. It doesn’t get scarier than that!
And that’s why we wanted to explore a topic here that, at first glance, may not seem intuitive – but upon close inspection, will actually reveal itself to be “common sense”: applying for a business loan BEFORE you’re desperate for one.
Based on our experience working with thousands of small and mid-sized businesses since 2008, there are 3 key reasons why you may want to heed this advice:
1. You’ll Make Better Decisions
As noted above (but worth mentioning again) no matter what we do in our lives — whether it’s booking a flight or driving to the mall — extreme stress isn’t our friend, because it hinders our decision-making ability and increases the chances that we’ll make the wrong move. And this isn’t just based on anecdotal evidence, either. Researchers like these ones here have explored and confirmed this on a scientific level, and they even have a term for it: “impaired decision making.”
2. You’ll Have More Leverage
When you absolutely MUST have more cash in your business “or else”, then you may have to accept limited options or pay a premium interest rate – not because lenders are taking advantage of you (at least, we at Mulligan Funding DON’T work that way!), but because your business may not be in a relatively strong borrowing position by that time.
3. You’ll Have More Control
By getting out “in front” of your business borrowing needs rather than being forced to scramble for cash, you can (if you wish) choose to borrow in stages. For example, instead of borrowing $100,000, you can borrow $75,000, spend it accordingly, and then decide whether to borrow additional funds (and if so, how much). This approach simply gives you more control over your borrowing and your debt level.
Obviously, we aren’t suggesting that you apply for a business loan when you have no immediate use for the funds, since you’ll be paying interest for no reason – and that makes no sense! What’s more, you don’t want “dead money” sitting in your business bank account, because with the virtually negligible interest rates that banks and credit unions are paying, the purchasing power of your money will erode due to inflation.
Rather, the point is that if you’ve been thinking seriously about covering an expense or making an investment and you need a cash infusion to make it happen, then applying for a business loan now — rather than waiting until you desperately need one – could be a shrewd move that helps your business stay strong and successful.
Call Mulligan Funding at 855-326-3564 to discuss your financing options today!