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This blog was last updated on December 10, 2020.
If you’re looking into how to apply for a business loan, one of the most important considerations around how to apply for a business loan is what to know when you are ready.
You’ve likely already done enough research to know which business loan is right for you (and if not, here’s some reading material), and now maybe you’re looking to understand which lender is the right fit for your business needs. These are all very important considerations.
To help guide you in the right direction, here are 3 tips to help you use your working capital business loan as efficiently, and effectively, as possible.
How to Apply for a Business Loan: 3 Tips For Success
1. Don’t borrow more from your business loan than you need
If you tried to apply for a business loan with a conventional bank and were turned down, or perhaps you have less-than-perfect credit, you may feel compelled to borrow as much as possible and essentially “strike while the iron is hot”. However, in our experience, this can be a highly counterproductive move. We counsel our clients on outlining a long term strategy for taking what you need, when you need it, and not over-extending yourself which could put your business in jeopardy.
Borrowing more than you need from your business loan can often create two problems. The first is that your repayment amount will be higher than it needs to be. This may not be a problem today, but it could become a problem a few months from now if your cash flow situation changes.
The second is that unless you have a profitable use for your working capital business loan (e.g. purchase equipment, hire staff, add location, etc.), the excess funds will be “dead money” sitting in your account. Business savings accounts typically pay little to no interest – and what they do offer is below the rate of inflation. So basically, you’ll be losing money by having it sit idle in your account.
2. When getting a business loan, ensure that repayment is automatic
As a business owner, time is money, and there is very little downtime. With so many priorities in your business, it’s easy for things to sometimes fall by the wayside. You don’t want your loan payment to be one of those things.
We work to help make sure that you never miss a payment, and when getting a business loan, this is a huge benefit to busy business owners. It’s one less thing to worry about so that you can focus on growing your business and keeping your customers satisfied.
The way to avoid missing any payments is extremely simple, and requires no warning system: have your loan automatically paid back each day, directly from your account. This way, you’ll never miss a payment; in fact, you don’t even have to think about payment. That’s a load off your mind, because, while it’s okay to occasionally forget to return an email or call a supplier, it’s really not a good idea to miss a loan repayment.
3. When you apply for a business loan, ensure that you can repay your loan early – with no additional fees
Often times, even if you borrow exactly what you need, you may find yourself in a position where you are ready to repay your business loan earlier than scheduled – and save money on the interest. Maybe you negotiated for a discount on inventory, or maybe you were able to get the job done with fewer employees than anticipated.
Whatever the reason, when you apply for a business loan, talk with your lending partner to make sure that you can repay your loan early and without any additional fees. This is not something that should be penalized, but valued, so don’t get taken advantage of with unnecessary fees and penalties.
How to apply for a business loan through Mulligan Funding
Applying for a working capital business loan can be the smartest financial decision you make all year. However, to maximize your loan and get the most for the least, we urge you to keep the above in mind.
Call Mulligan Funding today at 855-326-3564 to discuss your financing options!
The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.