Should I take out a business loan?
A hotly contested question at present is ‘Should l take out a business loan?’
There are two distinct groups, those who do not want a loan and will only resort to a loan as the action of last resort, i.e. when the cash is about to run out. And there are those who access debt finance in case they need it.
This has become particularly prevalent in the current circumstances, we have all heard about CBIL’s by now and there is a high degree of uncertainty amongst many businesses concerning future cashflows.
We’ve all heard the phrase ‘sales are vanity, profit is sanity but cash is king’. If you run out of cash, it’s game over.
To help give some consideration and planning to your cash requirements, l have put together a very simple cashflow model which l am giving to you. When l say simple, its about as basic as l can make it, but it should give you some guidance to your thought process when thinking about short term cashflow.
Indeed, if you were to ask for loan finance, a lender will ask you for this type of information. They are not asking for anything complex, they simply want you to demonstrate that you have thought about your business model and your cashflows.
If you need to review your cashflow position with me, l am happy to take a call and help you through the options.
You can request your cashflow model by emailing me directly: firstname.lastname@example.org
Written by: David Parker, Chartered Management Accountant with more than 20 years experience, 13 of those years in practice looking after small businesses.