Smart Borrowing

Smart borrowing can help you achieve some personal short-term and long-term goals such as acquiring your very first home or upgrading your motor automobile, getting a holiday home, simply paying school fees for your children, or getting some quick cash.?

Most people construe the basics of consumer debt: if you rack up more expenses on your credit card than you can pay back, you’re in a big squabble with your future finances. However, the vision isn't quite visible when it comes to small business debt.

Remember not all businesses are at a point where borrowing money is the best course of action for them. Let’s perceive it this way, what types of businesses should contemplate taking out a loan? How much debt is appropriate to incur? Bearing in mind you consider all the available options, including which kind of loan is right for your business, and how to ensure that your loan is helping you grow, rather than weighing you down.

If you want to be a prudent borrower, ensure you look for any possible avenue to not take out a loan. You can alternatively inhibit taking out a loan and make sure your business keeps running smoothly to work with your vendors.

For instance, if you own beauty products that exclusively cater to corporate clients, chances are you don’t get paid until 30 days after you cater services, or whatever the corporate client deems as their contractual agreement. Perhaps one of your vendors is the delivery service that transports your goods to clients. If you’re paying upfront for delivery, but then waiting for at least a month to get paid yourself, that could leave you vulnerable. In lieu, consider going into a contract with your delivery service where you agreed to provide them with all your business in exchange for them invoicing you for their service, giving you 30 days to pay the amount. The continued relationship will allow them to more easily trust that you will pay your invoice on time, giving you the same flexibility you give your customers. In this regard, this constitutes a very short-term, interest-free loan and it could help your operations jive to your desired tune.

Always be a smart borrower and invest in things that have value for your hard work.