The reality is that companies require greater flexibility when it comes to getting and repaying loans compared to individuals and households. This is because businesses typically have irregular income whose size is subject to various factors while most people get paid a fixed amount of money on a set date every month. Find out how to ensure maximum flexibility when getting funding for your business in the form of a credit facility.
You have to calculate precisely how much money you will need to borrow. It is wise to get a sum which is one or two percent greater than your spending estimate shows to allow for errors in your calculations. However, you should not borrow more than you need simply because the higher instalments will leave you with less cash available every month. This is especially important with unsecured business loans whose amount is not restricted by the value of a security. It is best if you get the option of topping up the loan at some time in the future under specific conditions. This is much better than having to apply for a new loan.
• Loan term – When selecting the term of the loan, you should keep in mind that a shorter one will result in higher instalments and lower total cost. With a longer term, you will have smaller regular payments, but interest and fees will be charged for longer and this will make the cost of borrowing higher. In general payday loans online tend to have a shorter term compared to secured ones due to the higher risk for the lender.
• Payment frequency – More frequent payments enable you to repay your debt more quickly. Besides the size of each payment is smaller. While this option is the most beneficial one, you should base your choice on the cash flow pattern for your business to ensure that you will be able to make all payments on time.
• Special relieves – You should arrange to get repayment holidays and the option to pay smaller instalments for a set period of time when the need arises. It is worth paying slightly higher interest rate for the sake of getting these benefits as they can prove to be invaluable in case of a bad period for your company. To know more about rental bond loans, visit http://directfinanceloans.com.au/reasons-for-loans/bond-loans/
Extension and Prepayment
You should negotiate favourable terms for the extension of the loan under special circumstances and for its prepayment as well. You should not be charged extra fees if you pay off what you owe in advance.