How will I pay back my loan? How often will I make payments on my business loan?
Because we’re partnered with more than 75 different lenders offering a vast array of loan options for all kinds of small businesses, the exact method and frequency with which you will pay back your loan can vary dramatically. Some small business loans are repaid with a simple monthly payment schedule while others require daily, incremental automatic withdrawals from your merchant account.
The actual cadence and method of your payments will depend on the lender and loan type you choose, as well as factors such as your business history. Typically, the stronger your business and credit, the less frequently you’ll have to make loan payments and the more payment processing options you’ll have. In contrast, the lower your credit score and overall business strength, the more frequent and determinate your payment options will be.
Whatever your lender determines for your loan repayment terms, there are some universal steps you can follow.
3 Ways to Save Time (and Boost Your Credit Score) When Repaying Your Loan
- When your loan repayment terms are determined, immediately add the payment to your monthly budget. Make sure it’s in your books so you can plan other major charges and recurring payments around your loan payment. Defaulting on your loan—or even missing one payment—can hurt your business credit score. Taking a few minutes to look at your finances can help you avoid hiccups and keep that business credit score looking pretty.
- Automate your payments. There’s a reason you see “automate” in pretty much every article you read about good financial habits. Once you set up automatic payments with your lender (it’s always easier than you think it’s going to be), you don’t have to lift a finger to make sure payments happen on time. Think about how much your time is worth. You don’t want to spend it on payments you could automate.
- Look out for loan repayment opportunities, like making lump sum payments on anniversaries. Some loans have penalties for repaying early (because lenders would be missing out on interest payments), but others will let you make double payments or lump sums on special occasions. Know the terms so you can get the most out of your business loan.
Get started with Lendio today
Our goal is to help small business owners have all the tools and knowledge possible about loans. We’ve connected to hundreds of banks to keep you up to date with the best loan offers and options for your business!
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