Stacking Business Loans Is Hazardous For Your Financial Health

Business loans are instrumental in promoting a business. They assist not only in financing new equipment and expanding operations, but are also a great help in sustaining operations so that a new business can thrive without difficulty. Flexibility, convenient repayment options, affordable costs and the ease of availing that accompanies business funding sure makes it an attractive bet for borrowers.

It is fairly uncomplicated for small business owners to reach out for business funding in terms of multiple loans, in a matter of days or even hours.Despite the good that has come from this evolution in financing, a new and disturbing trend of stacking business loans has emerged at the same time, increasing a borrower’s obligations while deteriorating his ability to pay.

The more loans you take, the greater risk you put your business in. While taking two loans may seem risk-free. Repaying two lenders at the same time could be a major monetary load on your business. Moreover, stacking your business with business loans stagnates growth,since more and more of your business revenue starts going towards repaying your multiple lenders.

Stacking does not just happen due to the lack of a borrower’s judgement about business funding. More often than not. It is an unfortunate trap laid out by unethical money lenders whose entire business model is base upon detecting recent. First loans made by a credible lender and then attempting to stack one of their loans on top of the original loan on an unaware borrower.

A dependable lender ensures that a loan is suitably size according to a business’ performance and ability to repay. And that the loan is an appropriate fit for the propose use. Stacking does a business more harm than good as it violates these sound principles and results in debt. Loss of profit, scaling back, bankruptcy and even closing operations for the borrower.

While loan stacking is tempting, falsely promising a lot of money spread over a few loans, is indeed a farce. You can maximise your cash flow without loan stacking as well by simply following the tips given below:

  • Timely payment of all bills to avoid late fees.
  • Assessing your financials to see if you can change your prices or costs.
  • Forecasting your cash flows for 12 months.
  • Re-negotiating terms with your customers to ensure timely payments.

Since we understand that money makes money grow, apart from these small measures. You could also turn to a more responsible way for potentially acquiring. Extra capital by discussing your concerns and need for additional capital with your former lenders.

Your former lenders would have your best interest in mind since they have already provided you with working capital. And won’t want you to struggle as their success too lies in the growth of your business. Such lenders would be the best people to give you more capital responsibly. Since they already know and understand not only your business but its constraints and obligations as well.

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