There are so many types of debt finance to consider that you could spend weeks exploring all your options. But actually, many of those won’t work for you.
For example, if you’re looking for fast cash for a short time, the last thing you want is to lock yourself into five years of loan repayments. But if you’re buying something big, like a competing business, you’ll need to borrow a large sum and have plenty of time to pay it back. The needs of your business will dictate what kind of loan you need, so when you prepare your business case, you’ll be able to rule out some types of finance immediately.
A business case will also help you work out how much you can realistically afford to borrow, how quickly you’ll be able to pay it back, and what rate of interest you can afford to pay.
This will also help you narrow down your options when you start comparing business loans – for example, if you know you’ll need 18 months to repay your loan, you can disregard lenders who only offer loan terms of 3 – 12 months.
Above all, a business case will help you decide if borrowing is the right choice for your business at this time. It could be that the costs simply outweigh the benefits, and it’s much better to find that out before you lock yourself into an expensive business loan!
If you decide to go ahead, though, it’s time to start comparing business loans.
So where do you start?