Starting your own business is no small feat. In fact, to really do it right it may take months, if not years, of planning to develop a concept and business strategy. But the most important thing you’ll need is money, or, more accurately, start-up capital in the form of a business loan.
Once you have formulated your business plan, applied for, and acquired the loan, you are now officially in business debt. And the only thing you want to do now is get out of it. Rather than sticking to the monthly payment plan outlined by the lender, use these tips to pay off your loan quickly, get out of debt, and turn your business into the profit-driven machine it was always meant to be.
- Pay more – This one seems obvious but the trick is to make it routine. If the amount you owe monthly is $350, round it up to $400. Over time, that extra $50 will add up significantly enough to cut months off of your loan’s term. And, naturally, if you can pay more, definitely do it.
- Pay more often – In addition to increasing the payment, you should also talk to the lender about making payments more often than once a month. Bi-weekly payments will keep the interest down because there is less debt to apply the interest to at the end of the month. But be sure that the lender allows this. Remember, they’re in the game for the interest payments and cutting that off by paying bi-weekly may not be permitted.
- Cut back – Every little bit of extra money you save can go toward paying off the loan. It may not seem like it matter to move that business meeting from a hotel conference room to your in-house conference room facility or smaller business office space, but over time that money savings can really add up. Cut the gym membership, keep eating out and other representation expenses to a minimum, and get rid of any other expenditures that are extraneous.
- Look for discounts – Some lenders offer discounts for choosing certain options like going paperless. Before committing to a lender see if they offer any advantages over the other one. In the cut-throat business of money lending, many offer such incentives to consumers in search for a loan
- Refinance – This is a great way to take advantage of lower interest rates. As the market gets better, interest rates lower and if you refinance your loan at the right time, you can take advantage of it.
These five tips will definitely reduce the amount of payback time on your loan. Another great tip is to save as much as possible before even heading into the bank. The less money you have to take out, the better. So keep it low, pay more and pay often. Your business will be out of debt in no time.
This article was written by Reggie Britt. He recommends Kwik-Loan, a lending software company that provides software loan solution for consumer-finance, payday and other lending organizations that serve the small loan consumers.