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23.Can I Afford to Take a Loan For My Business?

Air Date:

Nov 23, 2022


45 Min

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?

    • Business Expansion 

      • 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

    • Grants 

    • 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: 

  1. Can I afford to get a loan? 

  2. How much revenue do I need and by when to pay this loan back without creating a negative cashflow situation in my business? 

  3. Are there any red flags that I need to look out for? (early payment penalties, interest rate, etc.) 

  4. Cash BURN RATE

  5. 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!

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