5 Strategies if Your Loan was Not Enough

Have you scavenged the market, but were not able to find the loan amount that you had hoped for? Well, you are not alone. Obviously, the pandemic has been tough for a lot of small businesses, as owners find themselves in dire need of more capital. Conversely, many private lenders and banks are lending smaller amounts than they were prior to the pandemic. Here are 5 helpful strategies for if your loan did not end up being as much as you had hoped for.

1.Strategic Credit Card Usage

Do you need help making a large purchase or finance some larger piece of equipment? A credit card with 0% APR can help you get this done. Due to the higher interest rate nature of credit cards, you may want to wait to use a credit card until you actually know what you want to use it to finance.

A lot of people see business credit cards the same way that they see personal ones – which makes some people a little uneasy. In personal finance, we are always told to not spend more than we make, but on the contrary, businesses are not limited by salary. The revenue that you are able to generate is heavily dictated by the amount of investment that you are able to make in your business. For example, if you think that adding an additional crane to your rental business, that can create an additional source of cash flow.

2.Grant Applications

A grant is a great source of alternative funding, as it is pretty much just free money for your business, where you are not required to repay it. In response to the pandemic, numerous small business grants have surfaced, providing much needed funding to keep many small businesses afloat.

3.Repay Loans Quickly

Repaying loans as fast as possible can potentially help your business to gain access to additional funds, as you will be able to apply for a new loan once you repaid your previous one. By taking this approach, you may be able to meet the total amount of capital that you need. Additionally, if you are able to repay your loan quickly, you build up your credit, which is imperative to have lenders lend to you in larger amounts. 

Before going after this strategy, double check to make sure that there are no early repayment penalties associated with your loan. Many lenders incorporate these to recoup interest that is lost when you pay your loan off early. If your loan contract does not have these fees associated, you definitely should look to take advantage of this strategy. It still may be worthwhile if there are fees associated as long as you know what to expect when you proceed.

4.Debt Consolidation

You might want to take out a second loan to obtain the capital that you need, but you need to make sure that these funds are able to be used to repay your current debts. Upon this repaying, you make payments toward your second, larger, loan. This is called loan consolidation.

Make sure to not take out the second loan without repaying the first. This is called loan stacking and can put you into some trouble with your lender. Many loan terms prohibit this practice. Violating these terms can put you into some hot water and may make getting loans tough down the road. Are you reading this and thinking it sounds kind of like the situation that you currently find yourself in? Well, you’re not alone. The answer – loan consolidation!

5.Playing the Long Game

If none of the other options work for you, set a clear repayment strategy for your loan and just focus on the long game. This means just make sure that you are doing everything right now so that you do not find yourself in some hot water down the road. Always make sure to pay on time with calendar payments or automatic payments. This will help you to build up your business credit, allowing you to take out larger loans in the future. Lenders will be more likely to give you larger loan amounts if you build up a solid loan repayment history. 

Just because you did not get the loan amount that you hoped for does not mean that you should give up on business lending all together. Maybe take out a series of smaller, short-term, loans to meet their dynamic financial needs. As the economy stabilizes, we are seeing lenders more willing to lend to small businesses, especially in larger amounts. Focus your efforts on repaying your loans now and in time you may find that getting loans for your business will become increasingly easy.

If you are having a tough time getting the loan amount hat you want or the terms that are beneficial to you, visit us today to talk with one of our knowledgeable account executives and we will help you find the best deal or your business that fits your goals and budget.