Have you thought about applying for a small business line of credit? Maybe you’re in the process of sending in applications right now. Before you do anything else, read this blog post! We’ll discuss the six questions you need to answer for yourself before applying.

These questions are important and we know you’re anxious to move your business forward, so let’s dive right in!

1. How Will A Line of Credit Help Me Achieve My Goals?

Applying for a small business loan is exciting. An influx of capital feels good. But before you go counting all your extra cash, you first need to ask a very important question: “Will this loan put me in a better position to achieve my goals?

Accepting a small business loan isn’t a risk-free endeavor. Things might not go as planned. Depending on the kind of loan you take out (more on loan types in question six), you may need to make certain sacrifices to pay it off.

Additional capital can do wonders for your business, but only if you know what you hope to achieve with the cash before accepting it. So make sure you’ve thought through your goals and that every dollar you borrow is invested back into your business to make more money in the future.

2. How Much Money Do I Need?

If you’ve decided that, yes, applying for a small business loan will help you achieve your goals, the next step is determining how much money you need to borrow. What do you plan to do with the cash? How much will that cost?

If your goal is to stock up on new inventory or invest in new equipment, it should be easy to calculate the size loan you need. Just tally up all costs involved. The costs to accomplish certain goals may be harder to pin down, though.

For example, implementing a new marketing strategy has a lot of potential variables. In situations like this, do your best to accurately estimate the amount of money you’ll need. Then stick within that budget once your loan has been approved.

3. Can I Afford the Monthly Payments?

 You can know exactly what your goals are and pinpoint the perfect loan amount to turn your dreams into a reality. But if you can’t afford the monthly payments, you shouldn’t be applying for a small business loan. Plain and simple.

If you find this to be the case for your company, consider breaking your goals down into smaller, more manageable chunks. Maybe you can’t afford to borrow $50K at this point in time. But can you start your project with a $10K loan instead? It doesn’t necessarily have to be an all or nothing scenario.

We should also mention that loan affordability is affected by many things such as credit score, interest rate, and loan length. Be sure to look into all of your small business loan options before determining that your desired amount is too far out of reach.

‍