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6 Things to Do After You’ve Received Your Business Loan

Sarita Harbour

Sarita Harbour

Sarita Harbour is a Small Business & Entrepreneurship Columnist at Fundera and a freelance writer and entrepreneur specializing in business and personal finance. A former financial advisor, Sarita has over a decade of experience in banking. Her work appears online at sites such as Forbes, Investopedia, Yahoo!, Capital One Spark Business IQ, and Business News Daily. Connect with Sarita on Twitter @saritawrites.
Sarita Harbour

Congratulations! Your application for a business loan was approved and your funds are in hand. Okay, so… now what?

You might think now that your financing’s been secured, you’re all set to go full-steam ahead with your business plans. And although that’s technically true, what you do with your small business loan the minute you receive it can actually affect your future borrowing success. Now is a fantastic opportunity to better position your business for an even more positive financial future—you might even open doors to access to more money and different types of loans at lower rates.

Here are six things to do after you’ve received your business loan that can set you up for success no matter your type of small business, and potentially help you secure an even better deal the next time you look into business financing.

1. Schedule a Business Loan Repayment Plan

Now that you’ve been approved for financing, gone through the small business loan underwriting process, and received the funds, make sure to pay back that loan so you don’t jeopardize future loan approvals.

Add the payments to your monthly budget, diarize loan payments, or even better, set them up as automatic payments from your business bank account to ensure they get paid on time. Defaulting on a loan—or even missing payments—will hurt your credit score.

And, as you found out in the application process, your credit score plays a big part in determining types of loan products available to you. Although business loans for bad credit are out there, you certainly don’t want to limit your options—especially when you have the chance to build your business credit history with the loan you just secured! That happens by making payments in full and on time (which also builds a great relationship with your lender). This all can help you get better rates and terms the next time you’re looking for a business loan.

2. Plan for Loan Prepayment Opportunities

When you were approved for your loan, you should have been advised of any prepayment opportunities. These could mean doubling up loan payments on loan payment dates, making lump sum payments on anniversaries or other dates, or paying the entire loan off prior to the maturation date.

However, some loans charge a penalty for prepaying, because the lender will be losing out on the interest they’d be earning if your loan ran its full course instead. Check into this carefully so you know how your particular loan is structured. If your business cash flow will let you make a loan prepayment directly to the principal (the amount you borrowed), you could save money on interest, alongside building your credit record to show that you paid a loan off in full. 

3. Keep a Pulse on Your Credit Score

Once you’ve had your business loan for a few months, check your business credit score. Although not all lenders report to the business credit bureaus—like Dun & Bradstreet, Equifax, Transunion, and Experian—many do. Satisfactory repayment on your loan can help improve your business credit rating.

Regarding credit inquires, you might have learned during the loan application process that there’s a difference between a soft pull and a hard pull—most notably, that the former will affect your score while the latter doesn’t. Many services use soft pulls, so don’t get sheepish about keeping a pulse on that score, fearing that your credit will go down when you take a peek.

Something else to note: Sometimes getting a perfect credit score or (even just top marks) actually requires exceeding your repayment terms. For example, a rating of 100 from Dun & Bradstreet’s PayDex score is only granted when payments arrive before they’re due. 

4. Refinance Debt Into a Lower-Cost Loan

Looking a little further down the line, you might want to consider refinancing your business loan, especially if you’ve received a short-term loan and have been making all of your payments in full and on time.

You might be able to refinance that debt into a lower-rate and longer-term loan, especially if your revenue is increasing and your credit’s been improving. An SBA loan might even be in reach!

As time goes by and you show that you’re a responsible borrower and business owner, it could be worthwhile to refinance. This can reduce your interest rate and shave hundreds or even thousands of dollars off the cost of your loan.

5. Don’t Be Surprised by Calls from Lenders and Brokers

Once you received your funds, be prepared to start getting calls from other lenders and commercial loan brokers. When a UCC lien is placed on your business, it establishes your lender’s claim on collateral used to secure your loan.

This information is public. And enterprising industry folks search for this information, or they buy lists of businesses. That’s why you’re getting 101 phone calls after your loan’s been funded—people know that you’re in the market for a loan, and they see you as a prime candidate to borrow even more money.

Try to keep those calls from tying up your phone lines by registering your number with the National Do Not Call Registry, which should stop annoying telemarketing calls 31 days after you register.

6. Use Your Business Loan Proceeds to Grow Your Business

One last point to mention: Think carefully about how you’re spending the money you borrowed. Now that your funds are in hand, are you using them to become your existing setup more efficient or produce a new product? Are you hiring staff? Will you expand to a new market or larger premises so you can service more clients?

Small business networking options abound—if you have questions about how to wisely invest in your business, ask other small business owners who have been there, done that! Reach out in a place like Fundera’s Town Hall, a community for small business owners. To jumpstart your search, there are resources for black small business owners, or small business associations to look into—and that’s really just the beginning.

Remember, a loan is a tool to help grow your business. Use it wisely, care for it, and consider it a step along the way to your future business success.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Sarita Harbour

Sarita Harbour

Sarita Harbour is a Small Business & Entrepreneurship Columnist at Fundera and a freelance writer and entrepreneur specializing in business and personal finance. A former financial advisor, Sarita has over a decade of experience in banking. Her work appears online at sites such as Forbes, Investopedia, Yahoo!, Capital One Spark Business IQ, and Business News Daily. Connect with Sarita on Twitter @saritawrites.
Sarita Harbour

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