Hello Hive

Loan have been in existence for a long time now and while some companies have used this huge privileges to build and grow much successful, some other companies went into extinction because they were not able to manage the refund/, repayments of this loan .

The little percentage of the society that have been unable to manage their loans well have painted the whole idea of taking loans with a bad omen such that anyone who wants to borrow any finances for business promotion does so in great fear or even abandons the idea.

Taking loans may not be all that bad but ones attitude towards repayment determines if the loan will be a blessing or a curse to such individual.

Many thanks to Islamic banks these days who have created so many interest free loans where the loans and interest to be paid back on the loan is very much minimal.
But been in a large society, these banks are not widely spread and not everyone has had an opportunity to be close to these loans.

Before you can take a loan

There are steps and cautions you need to take to determine if you need to take a loan or not in order to avoid sinking in debt that will crash your finances.

• If there is an ongoing business at hand and the daily/monthly earning is fairly constant/stable such that the money can be used for prompt repayments of the loans based on their annual loan repayments plan then one can consider taking a loan for business expansion.
  Banks often charge loan and its interest based on an annual repayment plan and a certain percentage of interest .

When you take a loan of a 100k the interest might be 10% meaning that you will be paying back a total of 110k over 12months.
The business should be able to generate at least 9k every month to service the loan.

• Sometimes its good to determine if there is a collateral that you can let go talking about land or other property outside the business.
  In extreme or severe cases when repayment plans fails for certain reasons, the collateral can be used to repay the loan, instead of allowing the business to collapse.

• Taking Short term loans in smaller amount is more advisable, Splitting a progress work in bit and taking short loans at a time. Rather than aspiring to complete a huge projects and taking huge chunks of loan(money) to be repaid over a long term.

• Remember to check and understand the terms and condition of the loans properly. In some bank loans, there are other terms and condition names as OTC which you may need to consider as well, because when a loan fails and one is charge to courts those are the areas that will be looked into.

• Taking bank loans to buy liabilities such as Cars or items that may not generate any income can lead one into debt.
  If the car is meant for business purpose Manda need is perceived that it will make the business travel far and wide, than a loan is considered wise in this sense.
  While buying Car or Bus, Consider buying a quality one such that the income and business interest may not be channeled into repairing damages at all times, these are some of the ugly situations that makes business sink into debt after collecting a loan.