Most business owners have been in a situation where it may seem necessary to take out a business loan. For example, business cash flow can easily be squeezed in the event of growth, non-payment from customers or low seasons, etc. In such cases, a business loan can be a solution, but as in all cases when taking out a loan, there is one good rule of thumb: Don't borrow more than you need.
At Qred Erhvervslån, our most important task is to help Danish small and medium-sized enterprises grow and run their businesses. For us, it is also important that we ensure that we actually help the companies with the financing and, not least, that we ensure that the loans are issued in a sound and responsible manner.
Because the money you borrow must, of course, be paid back. That's why we encourage all borrowers to be realistic. Below we give you some advice on what to consider before taking out a loan.
Think about it
Review all your options and be well prepared before applying for a business loan. Think about whether you really need to take out a loan or if you have other options. For example, can you ask a creditor for a deferred payment? Do you have any debtors you can ask for prepayment before your product or service is delivered? Look through your income and expenses.
Review your costs
It's important to go through all your expenses and see if there are any areas where you can cut back. This could be anything from too high rent, subscriptions you don't use, too expensive or too many insurances, etc. Consider whether what you're paying for is actually necessary - and worth the cost. Reducing your expenses is a good way to avoid taking out a business loan.
Savings vs loans
It may be that it would be a cheaper option for you if you can manage to save up instead of taking out a loan.
Read all the fine print
Although technology today has made it much easier to take out a loan quickly and easily, it cannot be emphasized enough that before you sign, you need to have a full understanding of what the credit agreement entails. Make sure you have a full understanding of what the loan will actually cost you. It's not enough to just compare the interest rate, because what does the set-up fee cost you? Do you pay an early repayment charge? And how often is the interest charged?
Enter into a negotiation with the lender
You've been made an offer, but maybe the same lender would actually give you a better rate if you try to negotiate a little. It's certainly worth a try and you really have nothing to lose by asking for a better rate.
At Qred, we have a responsible lending policy, which means we always conduct a thorough credit assessment of each applicant. Both for our own sake - but not least for the business owner's sake, it is important to us that the company can repay the loan.
Part of our responsible lending policy involves engaging in a dialog with the business owner, as well as collecting sufficient information and data about the business. This data helps us better understand the company's financial situation, which ultimately means we can better match the company's needs and provide borrowers with the best possible deal.