Navigating the Treacherous Waters of Small Business Loans

If you own a small business, you’ve no doubt seen those ads promising quick and easy small business loans, usually for large dollar amounts. Should you really take out such a loan? Before you sign the loan agreement, there are a few key steps to protect yourself and your business.

Do your homework. The old adage,’ if it’s too good to be true, it probably is’ should be carefully adhered to. Take the time to read the fine print – ALL of it. It’s in these tiny details where you will find all of the responsibilities, commitments, interest rates and repayment rules. Meticulously review the details for additional fees, service charges and balloon payments that can easily double or triple in short time.  Depending on how quickly the loan is repaid, there may also be additional charges for early repayment. Surprise fees can quickly add up and take your business from thriving to life support.

It’s not uncommon to find different rates from lender to lender. Shopping around for rates and repayment options makes good financial sense.


When do you need the money?

If you think you might need cash at some point in the near future, start researching and applying for a loan now while your business’ cash flow looks good. The loan process takes time, generally four to eight weeks, requiring lots of documentation regarding your business’ finances, accounts, and often, personal finances as well. Be prepared and gather all of your documents before you start the application process. Going to a lender for money when your business is financially stretched puts the odds against you for an approval. If you present your business concept with a solid business plan when things are new or going well, you have a much better chance at success.  Borrowing when you don’t need the money, means that your business will have the available operating capital to plan through the leaner times, fueling even greater growth opportunities.


Find a financial Sherpa.

Trying to navigate the treacherous waters of small business financing can be a ‘swim at your own risk’ endeavor. The good news is that you don’t have to go it alone. There are countless resources available to entrepreneurs to help you on your journey.  The Small Business Association ( website is a tremendous resource for loan types, grants and other information. Additionally, small business owners can talk to consultants for free advice and even request a business mentor in their community or even in their business type, who can meet with them regularly and help provide a roadmap and framework for the growing enterprise. If the entrepreneur discovers that more ongoing guidance is needed, there are lists of resources and professional services also available.

Whatever route you decide to take to finance your business, remember that you never have to make the decisions alone.

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Copyright 2018 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire.