According to a US Bank study, 82% of businesses that fail appear in such situation because of cash flow problems. Cash flow problems aren’t something new for seasonal businesses since they have slow seasons with less money.
27% of businesses surveyed by the NSBA (National Small Business Association) report they weren’t able to receive the necessary funding they needed. According to those 1-in-4 businesses, the lack of funding prevented them from growing their business. This refers especially to women- and minority-owned businesses.
So, how are you going to repay your business loan if you’re in a slow period? In such situation, it’s important to know what steps to take so to be able to pay back the loan. Below you can find several tips that can help you manage business loan repayment with ease.
- Create Your Budget
Consider using budgeting or spreadsheet software. It’ll help you visualize your upcoming cash flows and better respond to a cash shortage. Having no idea of the amounts of money flowing into and out of your business will make it impossible for you to manage your cash flow wisely. Focus on minimizing your expenditures and maximizing your collections.
- Cut Your Cash Outflows
Another way is to speak with your suppliers so to find a way to extend the terms. Consider postponing those purchases that aren’t critical. Don’t spend money on things that aren’t urgent. However, this doesn’t refer to critical payment, such as the ones to your lender or to the IRS.
- Focus on Quick Payments
Negotiate with commercial customers and offer a special discount for a quick payment. Consider liquidating your equipment or wholesaling your inventory through an auction to raise cash fast.
- Apply for a Merchant Cash Advance (MCA)
To receive fast business funding, turn to a reputable business loan provider like firstamericanmerchant.com to get a merchant cash advance. First American Merchant is a respectable alternative lender and high risk payment processor that offers exceptional business funding opportunities to merchants of any type and boasts an A+ rating with the BBB. As you may know, a merchant cash advance is simply a sale. FAM will purchase your future sales at a discount. Both parties should agree to the amount of sales being purchased and for what discounted cost.
- Speak to Your Lender
Finally, you can speak to your lender to reset the terms in a way that will work for you. This means you can extend the length of the loan, which cuts the size of the payments, even if the interest rate goes up. You can also try paying smaller amounts more frequently. Moreover, you can try changing the payment date so that it coincides with your collections date.
As you see, there exist several options that you can try to pay back your loan during a slow season. All you need is to take the right steps so to overcome the challenges brought about by the slow season. Remember that one of the great options is to get approved for a merchant cash advance from a reliable business loan provider like FAM.