How Much Should You Borrow?

How Much Should You Borrow?

Borrowing for Your Small Business

How Much Should You Borrow?

Bank loans are a source of capital for many small businesses. Loans may be needed for a variety of reasons, beginning with the fact that expenses and income don't always happen at the same time. By knowing the criteria that a bank uses, you will be able to go through the process in a manner that will be easier and quicker for both you and the bank.

This is an important question that revolves to a great extent on your cash flow situation. Some of the expenses that might need to be considered include buying supplies and inventory while waiting to get paid, paying payroll and rent, and buying equipment and fixtures.

Prioritize those areas where your options are limited to paying in cash, and review your alternatives where you may have other options. Then review what might serve as collateral for your loans.

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