Borrowing Money

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Sometimes you may find that you may need to consider borrowing money, either to make a large purchase or to support cash flow. Before borrowing money, it is important to understand exactly how why the need to borrow money arose and be confident that your business is able to repay the funds.

It is good practice at all times to have short & long term cash flow projections and before borrowing money, you should adjust the cash flow projections to incorporate any additional profit that your purchase is expected to make and also to ensure that repayments are affordable.

Once you have decided how much you need to borrow and how long your business will need to repay, you should then set about finding the best rate available for your requirements.

When borrowing for your business, it is important that you clearly understand exactly who is liable for the repayments. In the event that you are a sole trader then you will personally be liable to make the repayments in the event that your business is unable to. If you are a limited company, but the lender asks for a personal guarantee, this means that you are making a legally binding personal commitment to repay the loan in the event that your business cannot.

Before entering into any agreement, you should ensure that you fully understand what you are entering into and if you are uncertain about anything you should seek advice before committing