3 Key Strategies That Will Allow You Pay Your Loans Without Selling Your Assets

02 Aug 3 Key Strategies That Will Allow You Pay Your Loans Without Selling Your Assets

The flexibility of banks these days when it comes to the provision of loans has reached where we can say it’s reasonable. Although many banks have stepped up their risk assessment and mitigation, they are still doing whatever they can to open credit facilities for businesses that need them. But of course getting a loan is not the hardest part. The job starts now when you have to pay. As a business, you can borrow money using business assets as collateral. Even if you are a small enterprise, you still have some assets and the bank will be interested to know what you can put up as security before your request is approved. Failure to pay loans leads to sale of assets. When it reaches a point where you are selling assets to service debt, your business is basically dead. You need to avoid this and here are three key strategies you can use to pay your business loans without necessarily having to sell your business assets.

Borrow Based On Cash Flow

Do not over borrow money from a bank. Although you need a loan to get your business where it want to be, ensure that you understand the projected cash flows over the next few years and how you can structure loan repayments based on that. After all, in an ideal situation, a loan must repay itself. In other words, if you are borrowing money, it should be for investment so that the returns can be used to repay the debt and further help accelerate the growth of your company. The rule of thumb here is to always borrow an amount that can be easily paid with the projected average monthly cash flows in your business over the next few years.

You Have To Be Honest In Your Financial Assessment

The repayment of your loan will be based on the money or the revenue your business will bring in at the time of the loan repayment period. As a businessperson, you need to be realistic when you are assessing financial health in your company and projected financial performance. After all, cash flow will determine whether you will pay loans without selling assets. If you have overestimated your Cash flow, you are likely to find yourself in a cash crunch with debts staring at your face. It’s better to actually underestimate and air in the side of caution knowing that there is some risk involved in your business and projected cash flows may not always turn out as good as you’d hoped for.

Loan Repayment Has To Be Prioritized

Repayment of loans has to be prioritized in the company if the sale of assets will be avoided in the long run. You have to look at the loan repayment as part of the daily operational expenses so that there is money set aside every month to pay the debts. This will ensure that your payments are on time.

Repaying your business loans is not as hard as it seems. Talk to Nordax Bank today and get flexible business loans.

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