Business Loans Are Cheat Codes You Need to Be Careful Of

Credit card companies love to tell you they’re the best option for business, hands down. And that you will be successful with loads of rewards. Yet, debt is record high. The same concept applies when you’re deciding if you should get a loan to serve as capital or not.

Two points are going to be mentioned. You may notice that we side on the spectrum of not getting a loan, and to rather take the slow but long road. Think of it as choosing to build our characters and their skills up versus applying cheat codes to be at a superior level. Many people would choose cheats, like they do with SIMS. We prefer to enjoy the process, because we do. We thoroughly enjoy building our SIMs up. “Sul sul” if you agree.

The Thoughts Behind Getting a Loan

First, you may think you’re really good at money. You may very well be. But if you’ve never handled thousands and thousands of dollars in one setting, you’re going to struggle managing a loan. You can tell yourself that you will be very careful, but those old habits remain – the paycheck-to-paycheck habit, specifically. For some strange reason, the majority of us fear having that much money in our account. We’re not used to it. It doesn’t feel safe. It feels uncomfortable. Hence why we lose it all or most of it. So, if you’re asking for $50,000 before interest, but you’ve never managed more than $5,000 on your best month, how careful can you really predict you’ll be?

The good news is that you can still shape up now. If you know deep down you really need this loan to move forward, and you’re not interested in any investor or credit cards, then sure. But you need to manage it like this:

• Only spend a percentage… like 10% at first


• Take the other 90% and put it in a savings account

The entire idea is to not see all this money and get starry eyes. Most people who win the lottery go bankrupt. Hardly anyone ever invests. You’ll automatically take a percentage that is doable for now and tuck away the rest. That’s investing in a rainy day.

But why only 10% for now?

Your best month is never your average.

Neither is your lowest month. There is a high and low for a reason. If you think that you’re only going to grow after using this loan, think again. There will be low months again and you’ll be wishing you had some money on hand to keep moving forward. Because the more we spend, the more upkeep and monthly bills we have. If you’re investing in software, there is going to be a subscription fee from here on out. When your loan is gone, can you upkeep those added fees?

What to Never Spend Your Loan On

Wages and to cover bills you can’t afford. Any time you use a loan or capital on things that eventually run out, you’re in trouble. You’re only going to get yourself into more debt and be in need for another loan. It’s not a good place to be.

What you can spend it on is anything that leverages you toward where you need to be. In other words, if you can identify the bottle neck and absolutely know, without a doubt, what the solution is and that it’ll work, then pay for it. But if you “think” you know what the solution is, take our word for it – don’t buy it. You need to be 100% sure you’ve got the ticket to growth. Don’t even think about getting into any debt unless you for sure know the answer.

This includes marketing campaigns. You can’t guarantee a campaign will work. It’s risky. You’re better off spending less on that and testing the market before you invest more funding and get into debt.

Tips for Managing a Loan

1. Don’t spend it all right away. Be sure to hold on to a large chunk. Only touch what you need and test if it’s enough. If you need more, tap in. If not, then you’re that much less into debt.
2. Don’t expect to spend it all. In fact, get it in your head right now that the sum you ask for will not all be spent. Expect to take care of what you need with less. Just because it’s there doesn’t mean you need it all. Give it back to your lender once you’ve accomplished your goals.
3. Have low expectations on paying it back. That’s right. The reason we get into trouble and further debt is because we have high expectations that we will be able to pay back every dime we spent. Remember that you will hit low months in the future. You may be able to pay back your monthly fee for one month, only to be in the negative for the unforeseeable future until you get more money. Debt on top of debt. Remember those added fees? That needs to be compensated.

If you need help, then sure. But understand that even if you get a whole chunk of cash, it doesn’t mean you need to spend it all. It’s intimidating to have tens of thousands of dollars that is borrowed and eventually owed. Especially if you haven’t ever had that much money in your account. Being careful means knowing absolutely what you need it for and that it will definitely work out. Are you ready for that? You can be. Just follow these tips.