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Managing Small Business Loans

Running a business in today's economy can be difficult. When you have to take out loans, you need to set up a plan for how to pay them back. The first thing you need to realize is that it is okay to take out a loan as a small company, especially when you first open your doors. Starting up takes lots of capital and almost no one can do it alone. You need the money and even the advisement of banks to help you. Here are tips on how to keep money in the business and manage your small business loans to pay them back properly.

Watch Your Expenditures
Keep track from the beginning what you are spending. This way you can make a good budget for yourself to save and allocate money in the future. Do these things to save every bit of money that you can:
- Keep the lights on motion sensors. This way they will never be in use and using up power when they are not needed. The break room and bathrooms do not need to be lit when someone is not there. Face it- people are not very good at turning off the lights by themselves.
- Get energy saving light bulbs and turn down the heater a couple of degrees or the air conditioning up a bit. This can save lots of money over the long term.
- Save bonuses for when you have more cash flow. Employees will understand and you can use that cash to pay back loans faster.

Get A Big Enough Loan
Banks usually charge outrageous interest rates for small loans. So only take about a loan if you need to, and take out a big enough one in the first place so that you do not have to add to it later. If you add more money to the loan, interest rates may climb. Seek enough capital in the first place so that you are not left scrambling when it comes time to pay employees. If you find that you cannot pay them, people will start walking out on the company. You would be surprised at how many friends you could lose over money or the lack thereof.
So keep on top of your expenses by starting out with a big enough loan to cover you until you can begin making revenue and profit. Profit comes after you have paid the bills and yourself. Salaries count as bills, so pay them up as soon as you can.

Pay Bills On Time
Bills can accrue and build up if you are not good at keeping up on them. Just as you would keep up with your own personal phone and utility bills you need to keep up with the bills of the company. Imagine not paying your home mortgage bill for a month or two. Your insurance company would start calling, your mortgage company would go ballistic, and you would never hear the end of it from your spouse. You are in serious business when you take out loans. So expect to have to pay them back.

If there is some reason you think that will not be able to for a certain time period, call your lenders or providers for some leeway. Many companies have a policy under which they can help people out in dire circumstances. However, this is a one-time thing, and should only be the excuse in your first few years of starting up your business. And make sure to keep open the lines of communication in such circumstance so they don't think you have fled the country with their money. Pay back your loans on time to keep your doors open and your credit score high.

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