Loans- A loan is a sum of money that one collects from another on the condition that such money is repaid at a specific time or over a specific period. The idea of getting a loan does not always appeal to many business owners. This is because in many cases, loans come with huge interests and there is always an uncertainty hovering over every business, with loans, there is always the question of the ability to pay back and at what cost.

While these questions are what business owners would have to ponder over, it does not change the fact that loans are an important feature of business. Loans are the reason why many enterprises are still running today and are where they are. https://www.weebly.com/inspiration/5-reasons-your-business-needs-a-loan/

Advantages of taking out loans.

1. You do not have to share the profit with lenders

2. Getting a loan does not also require you to give out equity

3. Another perk of getting a loan is that it allows your business to grow as the loan can be used for a variety of business purposes

4. Bank loans also have reasonable interest rates

Disadvantages of taking loans.

1. The process involved in getting a loan is most complex and takes time.

2. Banks usually require collateral before giving out loans

3. The penalty for default could be loss of assets.

4. Qualifying for a loan can be an uphill task

5. Loans when not properly managed can result in a circle of business debts.

Having known the benefits and downsides of taking a loan, it is important to know how to negotiate a business loan.

5 tips for negotiating a business loan.

Note that before you even consider going into a bank to ask for a loan, you ought to have paid back other debts that you owe. You should also identify your company's weaknesses and work to fix them as they can reduce your chances of getting a loan.

Below are 5 tips that are tested and trusted when it comes to negotiating business loans.

1. Know the lender: It is highly recommended that you conduct research on some lenders before finally settling for one. Carefully consider their lending history before approaching them for loans. Acquaint yourself with their practices and style before approaching them. This way, you are prepared and not caught off guard.

2. Know your numbers. This would enable you to defend your forecast. Yes, business forecasts as prospective lenders would want to have an idea of what your company's income would look like in the months to come to ascertain if your company can afford to repay the loan. To effectively know your numbers, carry out an analysis of your company's strengths, weaknesses, opportunities and threats (SWOT analysis). Do not hammer on your weaknesses and threats, rather show how you plan to utilize your strengths and opportunities and how that would in turn get your lender back his money as this is his major concern

3. Use the right vocabulary. This would show a level of seriousness and commitment on your part which is what the lenders want to see. Asking a prospective lender to explain certain terminologies to you would only mean that you do not know what it means to get a loan and do not understand the associated risks and expectations.

4. Have a negotiation plan. This involves determining beforehand what you want to use as collateral and also asking about prepayment penalties. Some lenders demand/have prepayment penalties.

5. Look-the part. All the points mentioned above can go to waste if you do not look like one who should be given a loan. Your appearance should command respect. Organize your paperwork neatly. All documents should be free of typographic errors. They should be in good condition and up-to-date.

In summary, before you sit down with your prospective lender, get to know him by conducting your research, have figures and facts that involve your company at the tip of your fingers, know your terminology, have a plan in mind and organize your physical appearance. Doing all of this would get you the loan you are seeking with minimal hassle.

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