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One of the most exciting things we can get our hands on as entrepreneurs, small to medium sized business owners to further unleash our creativity, expand our business and watch our vision come to life is access to capital.

I say “exciting”, at least for the times when that capital is used as intended.

This is why so many of us turn to business loans to fund and fuel our business growth, especially when there is a growing demand for financial products such as "NO-DOC" and "LOW DOC" business loans.

However, you can kill your dreams of building a solid business and life for yourself and family by taking on a business loan.

Things People Usually Don't Consider

A business loan is a huge commitment that should not be taken lightly. Getting access to capital is one thing but I think one of the more important things entrepreneurs and business owners don’t consider as much is what happens after they receive funding.


Business can be unpredictable, especially in this current economic climate. The last thing you want to do is be stuck with low sales and a $900/month loan re-payment, that is due.

I was talking to my friends the other day, someone who I really respect when it comes to always being able to discuss complex and cutting edge business strategies. He is the one who actually got me interested in business by the way.

I was asking him about buying businesses as it came up in my scope of research. As usual, he had a lot to say, and you know I don't mind getting new perspectives and information to go dig into.

He mentioned something really insightful, and looking at it now, it may have been a simple thing, but it just wasn't in my awareness yet at the time. He mentioned that one of the things he does with his team when he buys a business is, they fire the existing employees. Hear me out. At first, I thought man, that's a little bit harsh but I came to understand it.

It is for the very reason I will talk about below.

Check out this scenario:

Sometimes a business receives funding, and after being funded, things may go well for the first 6 months or so, however, that capital they would have invested for some reason may not create the sustainability or expansion they thought it would. This could happen for several reasons. At some point, after looking at the forecast, entrepreneurs and business owners may decide that the remedy to the pending disaster is to get more funding.

Because the business would have been making payments on time over the last few months and has created somewhat of a working relationship with the lending institution, the lenders may decide they are going to provide the entrepreneur with more funding. This is where the problem begins.

The entrepreneur or small business owner hasn’t truly addressed the core issues with the business, things like their marketing strategy, company management etc. And most of the time, this is where dreams begin to die. In another 6 months with the same operation, they will now be stuck with two loan payments with a combined total of $1800/month.

If you are thinking about taking on a business loan, keep reading. This article is not to try to stop you, it's only to have think before you act.



When taking on a business loan, always define the purpose of your loan. Spend the time to write down or document it, and also a realistic plan of how you plan to achieve it. When you understand the purpose of the loan, i.e., whether it’s for working capital, expansion, equipment purchases etc., you will have a better idea of the amount you should be borrowing.

You don’t want to borrow more than necessary. This will affect not only your interest costs but also your payments monthly payment.


It’s important to understand and be honest about the overall knowledge and skill level of yourself and or your current team. You and your team will be the ones tasked with carrying out the goals set for the company to achieve with this funding.

Many entrepreneurs are one-man bands that wear many hats in their business, and while you or your team members may be good at any one thing, there may be knowledge gaps in other areas. This is the time when you must be upfront about what those areas are. If you haven’t been tracking your performance or your team’s performance before, now is a good time to start. This will also help you to understand where those knowledge gaps are and weak points.

If your business is to do what it is setting out to do with the funding you are applying for, which should ultimately be generating more revenue so you can repay that loan and build sustainability, both you and your team’s performance will be the thing that makes it happen.


Make sure to request a copy of your credit report and review it thoroughly for accuracy and anything that seems out of place. Your credit worthiness will most likely be evaluated by your lender before approving your business loan application.

Your loan terms and monthly installment will also be affected by your creditworthiness and therefore you should take steps to improve your creditworthiness before applying if necessary.


One of the best things you can do to make sure you are getting the best deal is to shop around. You might shop around when you need a price quote to paint your house, it should be no different with lenders. Make sure you explore things like term loans, lines of credit, SBA loans, or alternative financing options.

Another thing to look at is the lender’s google business profile reviews.

Their google profile may be able to give you a good indication of how the company operates when it comes to the customer facing side of things.

You will also be able to see what others are saying about the company, how long they have been in business and other resources to help you make an informed decision.


Another thing you should be aware of is the impact a loan will have on your cashflow.

Remember that you will now be adding on an additional monthly payment to all the other expenses you already have.

How to increase cash flow

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If you plan a new marketing campaign with the capital you just obtained, keep in mind that sometimes campaigns take a while to start working and you will be learning and gathering data in the initial stages. You will still be required to make your monthly loan payments even in this stage when the business probably won’t be seeing a return just yet.


Terms and conditions

Interest rate

Repayment period

Collateral requirements

Fees and penalties for late payment


Before you take out a business loan, have you tried looking into setting up a google ads campaign? Do you think you have given google ads a genuine try?

If you have a knowledgeable google ads specialist, this can be a powerful tool that can generate significant traffic, and if set up right can also convert that traffic into paying customers.


If you decide to take on a business loan, it’s important to have a working plan of action in place. Set clear goals and how you plan to achieve them. Consider hiring others who are more experienced or qualified in areas you are not.

A business loan can kill your dreams, leave you frustrated with a bunch of debt, or it can help you to achieve them. But to give yourself the best chance of achieving them make sure you and your team are fully aware of what needs to be done.

As entrepreneurs we can be tempted to think we know everything because we’ve read something on the internet, but there are always a lot more moving parts to things, especially making a business loan work in your favor.

Let me know what you think below.

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