Debt is one of the most powerful tools available to a business owner. It is also one of the most misunderstood. Here is how to use credit wisely and avoid the traps that bring businesses down.
Take a loan to buy stock, purchase equipment or expand capacity. These investments should generate returns that exceed the cost of the loan. Avoid borrowing to cover ongoing losses or to fund personal expenses through your business.
Before you sign a loan agreement, calculate whether you can make the repayments even in a slow month. TruCredit structures repayments to match your business cycle, but you still need to understand your own numbers.
Late repayments damage your credit record, attract penalties and strain your relationship with your lender. If you are going to struggle with a payment, contact TruCredit early. We would rather help you restructure than see you default.
The fact that you qualify for a large loan does not mean you should take it. Borrow what you need and can comfortably repay. Growing your credit gradually is smarter than taking on more than you can manage.
A rough rule of thumb: your total loan repayments should not exceed 30 to 40 percent of your monthly income. If repayments are taking more than this, you may be carrying too much debt and should focus on repaying before borrowing again.
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Speak to a TruCredit advisor today about the right loan for your situation.