5 Smart Ways to Stay on Top of Loan Payments
A fundamental challenge many new businesses face in the early days is managing loan payments. Of course, if you’re lucky, or your business has produced profits right off the bat, you might not have to borrow money in the first place. But many startups do rely on loans so making timely loan payments can be difficult if your cash flow is less than desirable. Paying off your loans is requires a careful strategy — the consequences of missed or late loan payments could impact your business credit for years to come. Paying off loans efficiently keeps your business in good standing and gives you the ability to keep borrowing money to grow in the future. To help, here are five strategies to keep up with your business loan payments :
1. Ask for Help From Friends & Family
If you have pressing loan payments to make and you just don’t have the funds on hand (or dipping into them will negatively affect your business), you may need some quick assistance. For this sort of thing, a lot of entrepreneurs will turn to friends and family for more lenient loans and contributions. It’s a perfectly ordinary step to take, and it can take some of the repayment pressure off of you. Simply put, you may be able to take more time paying back family and friends after they help you to manage your debts. That said, this may only be an option if you own your business independently. Friends or family may be hesitant to lend money if other people they don't know are involved. Just remember, borrowing money from friends and family can ruin relationships if handled improperly so be aware and upfront with the risks. It's in you and your family's best interest to write out a loan agreement and stick to it.
2. Build Alternative Revenue Streams
Successful investment can make for a side revenue stream in and of itself. That’s the idea, at least. However, you can also look for more direct additional revenue through side gigs that involve no risk — but do require time. That’s a resource a lot of entrepreneurs don’t have much of but the range of side gigs out there today can still offer some opportunities. Small side jobs like transcribing audio content online, managing a company’s social media accounts, or even doing occasional proofreading or tutoring can earn you between $15 and $20 an hour, if not more. That money may not sound like much, but it can make all the difference for a startup managing debt. You may find that a month or two of odd jobs helps you to make a significant dent in your loan repayments.
3. Look Into Consolidating Loans
One last strategy for addressing loan payments is to look into ways of consolidating them. In a way, this is what we’re talking about above with regard to looking for help from family and friends. However, you can also consolidate loans a little bit more officially, either through an additional loan or a credit card. A consolidation loan is one that essentially pays off your other debts so that you only have one repayment schedule (and interest rate) to concern yourself with. As for a credit card, your options will depend on your credit rating , but you may be able to get a card you can pay off a substantial portion of your loan debt on, such that from then on you just have to pay off the card itself. Neither option subtracts from what you owe, but both can take the pressure off. Through any or all of these strategies, you can stay on top of your loan payments and keep your business in sound financial shape. Read: Need a Loan ASAP? 9 Tips to Raise Your Credit Score and Get Approved
4. Invest on the Side
If you’re looking to pay off loans, you likely don’t have a ton of spare cash, either personally or on behalf of your business. However, there can be something to be said for carefully putting what money you can into external investments. While this involves some risk, it also enables you to build grow income streams that you can use it to pay off a more substantial portion of your loan payments in the future. This doesn’t necessarily mean you need to open a complex stock market portfolio, either. There are some more manageable investments that can be less daunting. The forex market, also known as currency exchange, is one popular option. The basics of forex trading involve just a few lessons and strategies that will teach you how to analyze currency fluctuation, read charts, and make strategic investments. All in all though, the concept is straightforward: you want to profit off of currencies that grow in value relative to others. This can be done through standalone forex brokers, meaning it doesn’t involve a stock portfolio, and can be managed fairly simply.
5. Find Additional Capital in Other Ways
One way to stay on top of your existing loan payments is to avoid amassing more of them. While this doesn’t directly help to pay off debts, it does help you to maintain a financial position in which you can make your loan payments as efficiently as possible. So, if and when you need additional funding for your business, you might want to try finding it in ways other than a loan. An increasingly popular option today is to explore crowdfunding options . There are various forms that this type of investment can take; in some cases, you’ll need to provide something in exchange for funds (such as exclusive access to your business or a discounted product), and in others you might effectively receive donations from strangers who admire your venture. Whatever the specific setup may be though, this is a good way to generate more capital without more debt. You may even be able to funnel said capital straight to loan repayments. More From Seek
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