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5 reasons why you should apply for a loan right now

By Jules Dalsey

A wise man once said: “Prepare for bad times and you will only know good times.”

His name is – Robert Kiyosaki. Yes, it was the same Robert Kiyosaki who penned the legendary Rich Dad Poor Dad series. When bad times come it’s too late to prepare. In business, when bad times come, it  most often means you have ran out of money. What do we do when we run out of money? We borrow. And bad times are the worst  of times to borrow.

So, what happens when business owners wait until the eleventh hour to apply?

  1. Their credit is deteriorated and it’s much harder (if not impossible) to get a loan approval.
  2. Their sales are already declining. Again, not a good sign for bankers and lending institutions.
  3. New approval amount and interest rates are now drastically changed due to the increase in credit risk.
  4. Cash flow is unable to service debts so owners start to “rob Peter to pay Paul”.
  5. In addition, if the whole economy suffers, bank accounts suffer; they have negative days (NSF’s) and can no longer demonstrate the ability afford any type of borrowing.

The end result is a downward spiral.  This is where you lose control and only few options remain. After which, it is just too late to get financed under favorable conditions.

This is why each business must think ahead and borrow when their sales, credit, and overall business performance is healthy.

Why do business owners wait to borrow?

Most business owners will wait to apply for financing in order to save on interest expense. They will wait because the need is not quite urgent or dire during growth.  Other fear of acquiring additional debts and most will procrastinate because they are busy running their businesses.  In consequence, they will neglect to look ahead.

To make matters worse,  instead of securing more conventional financing, some business owners would rather use their personal credit cards. Sure, seems convenient but, there’s a potential negative impact to personal and business credit.

When business owners max out their credit cards, it reduces their credit score. Banks will now categorize those applicants as “high risk.” Therefore, maxing out credit cards could impact long term  business and personal capital growth/”survival” plans. This is why most bankers will tell you that one should apply for loan in good times. This is why Robert Kiyosaki said “Prepare for bad times and you will only know good times.” Apply in times when the need is not there so when need arises you’re sure to have plenty of access to capital at ease. Don’t wait for bad times.

There. Now, you’ve just ran out of excuses. And it’s better to run out of excuses than to run out of money.