A business loan can be a huge, long-term commitment to have. If you have taken out a business loan and are having trouble paying it back, you may be wondering about your options.
The great thing is that even if you are having trouble paying your business loan, there are options you may be able to consider.
If You Are Having Trouble Paying Your Business Loan, Think About Why That Is
Although this may sound simple, it is the essential first step. When determining what route to take when you have trouble paying your business loan, figure out what the major cause is.
Here are two main reasons why people have trouble paying back their business loan:
- Their Personal Financial Habits/Change in Finances—A lot of times, a person may find that it is their own spending habits that may be preventing them from making loan payments. Additionally, finances can change and a loan that was once affordable may not be in the present moment.
- The Business Loan Itself—Sometimes the business loan itself can be the cause of why a person is unable to pay back the loan. This can be for a variety of reasons, such as a variable interest rate that may increase to the point of not being affordable.
No matter why you are unable to pay back the loan, there are options that you may be able to take.
What Are My Options if I Am Having Problems Repaying a Business Loan?
If you are having trouble with the payments on your business loan, here are a few options that you can consider:
- Talk to Your Lender—This is one of the most important things that a borrower can do. It is extremely crucial to keep your original lender updated, especially if you think that you won’t be able to make payments for more than the current month. This can help with preventing default on the loan, and the business loan lender may be able to help!
- Refinance Your Business Loan—Sometimes a good solution is refinancing the existing business loan. Refinancing a loan involves taking out a new loan. The process usually changes several terms of the loan and could make repayment much more affordable.
- Consider Financial Coaching—If you are having trouble paying the loan back because of your financial habits, you may want to consider speaking to a professional. A financial coach could help a person track their spending and help prioritize payments on the business loan.
- Consider a Late Payment—If the reason that you are missing your payment is as simple forgetting, sometimes the easiest option is to pay the late fee to your existing business loan lender.
When considering these options, it may be helpful to think about why you are having trouble making the business loan payments in the first place, and then pick an option that makes the most sense.
How Do I Prevent Missed Payments with Future Loans/Finances?
Moving forward, there are ways to prevent missing payments for loans in the future.
Here are a few preventative steps you can take with any kind of lending:
- Make Sure to Understand the Details of the Loan—Before signing onto a loan contract, it is extremely important that you know the exact details of the loan, and what you will be responsible for. Pay extra attention to details like the interest rate, which may fluctuate (if the interest is variable), and things like fees.
- See How the Loan Will Fit with Your Budget/Finances—Before getting a loan, it is crucial to see what you can afford. A budget is a great way to see exactly what fits in with your monthly finances before signing a contract.
- Make Sure That You Have Reliable Income—Sometimes things can happen that are unpredictable. But if you are in between jobs, are a contract worker, or are self-employed, it is extremely important to think about whether your income can support the cost of the loan for the repayment period.
Can MaxCash Help Me if I am Unable to Pay My Business Loan?
At MaxCash, we are a loan financial referral service that works hard to connect people with our network of reputable lenders. We do more than just lending, we help customers make informed lending decisions, and try to help every step of the way. Unlike like other lenders, we try and make the lending process as simple and transparent as possible—best part of all, our services are completely free!