Can your business afford to take a loan? When and how do you come to this decision
This is a question a good accountant should be helping you navigate and answer
Listen in as Lola and I give you the questions you should be taking back to your accountant to make sure that you have the right information to make this key business decision.
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Episode Show Notes :
Introduction: If you’re paying for an entrepreneurial accountant, then they should be helping you make key decisions when it comes to your business. One of those questions may be - can my business AFFORD to take out a loan?
The Meat :
Point 1 - Why do we need this loan?
Cash is low
Why is your cash low?
Identify how this loan will help grow your business - use hard numbers, not feelings or guessing
The money is available
Point 2: What’s the game plan to increase our cashflow so that we can pay the money back?
Point 3: Consider alternative sources of funding
Small business assistance programs that have more favorable lending rates.
Other Points we want to highlight:
COURSES WE WANT TO DISCUSS: How to Get a Bank Loan
Conclusion - This isn’t a decision you want to make by yourself, so if you’re thinking about getting a business loan, send your accountant these 3 questions:
Can I afford to get a loan?
How much revenue do I need and by when to pay this loan back without creating a negative cashflow situation in my business?
Are there any red flags that I need to look out for? (early payment penalties, interest rate, etc.)
Cash BURN RATE
Are there are any other areas I can cut back
These are basic questions a good accountant should be able to answer and if they can’t then it may be time to get yourself a new accountant - until next time!