How Much Money Am I Looking For?
While you may assume the best amount to ask for is “the most money I can get”, this isn’t necessarily a great strategy for a business. This answer tells a potential lender that you haven’t really thought through your loan purpose. Your loan purpose should drive the answer to this question.
Those taking out the loan need to understand the costs associated with borrowing additional money that they may not necessarily need for the actual request on hand. It is important for business clients to ask themselves, “What is my true return on investment going to be should I decide to take out a loan?”
- Is it going to increase the production capacity leading to additional sales and additional income for the business?
- Are the additional funds worth paying interest on if I don’t really need them right now?
- Will I be able to borrow money down the road if I already have too much equity tied up with an existing loan?
There are costs associated with borrowing that should be thoughtfully considered every time you seek borrowed funds. In other words, borrow what is required to fulfill your business need, but no more. For questions about ways to expand and determining if a business loan is the right option for you, consult with a commercial lender who understands the different options available.View More Articles