The Coronavirus pandemic has had far-reaching repercussions on almost every aspect of our lives – and the business world is no different. With entire industries coming to a standstill, there have been many casualties along the way, and they haven’t just been confined to fledgling entrepreneurs and start-ups. According to McKinsey, over 50 billion-dollar companies filed for bankruptcy last year in the USA alone.
With that in mind, any business owner looking to take out a loan in a post-Covid environment should carefully consider their options before committing to a deal. The current climate is one that has been irrevocably affected by the previous 18 months, which will not only make lenders more averse to lending large sums but should also make business owners think twice about over-stretching themselves in case the unexpected occurs. Here are four considerations to keep in mind when exploring lending options amidst the “new normal”.
A clear and comprehensive business plan is the cornerstone of any successful loan application, but the importance of dotting all Is and crossing all Ts has only increased due to the pandemic. Identify concrete goals you want to achieve, layout unambiguous pathways for how to reach them, and allocate resources (down to the penny) for making it all happen. Doing so will not only impress your credit provider but also stand you in good stead as you spend the funds after the fact.
Risk assessment has, of course, always been a central component of any successful business. But whereas it used to comprise a once-in-a-year box-ticking session, it has now morphed into a constantly-scanning-the-horizon endeavor. That’s according to the World Economic Forum, which warns that being aware of and being prepared for even unlikely or potentially unforeseen disruptions and disasters is a key stratagem for staying afloat in a post-Covid world. That’s especially true when it comes to taking out a loan upon which the survival of your business may depend should the unexpected come to pass.
Do your research
With so many options out there, choosing the best business loans for your particular company is paramount to obtaining the best deal. There are some lenders who prioritize speed, others who pride themselves on accessibility, and more still who set a higher bar in exchange for more favorable terms. Assess your own circumstances and then survey the market, before deciding upon which lender is right for you in terms of their rating, reliability, and customer service.
Seek professional advice
While doing your own research online is an excellent way of familiarizing yourself with the options available to you and educating yourself about the particulars of the financial climate at the current time, there’s simply no substitute for the insight provided by a trained and experienced professional. That’s why it’s advisable to sit down with your accountant before taking out any business loan and run through the terms of the agreement with them. They can highlight any potential pitfalls and point you in the right direction with regard to a successful plan moving forward.
Taking out a business loan is a momentous decision for any company at any time, but it has taken on additional gravitas in the wake of a global pandemic. Make sure you view the deal from all angles before signing on the dotted line.