3 Considerably Helpful Ways to Assess Your Business Loan Capabilities

You must be surely aware of the fact that it’s quite critical and decisive that your business has enough of money to fund the financial operations to be done in the first few years or so. The survival rate of new businesses vary as per the statistics revealed over different time intervals. However, luckily there are many options to fund the business in the first few years in order to establish a strong business in the coming ones. For instance, the most recommended and common options are considered to add more capital, or the other way is to take out business loans. Apparently, you just need an infusion of cash, what so ever might be the way. On one hand, where adding capital does not require you to return the money, a business loan comes along with a recovery schedule. In that case, it becomes necessary to be able to know your business loan capabilities.

Here are three considerably helpful ways to assess your business loan capabilities -  

1. Start with the Review of Your Business Performance
   
   How well do you know your business? Is it important to know it in and out? You bet. Of course, a business owner must be aware of both projections i.e. in-house reports as well as the industry standards. This will put you in a state of accurate assessment of your business with accurate, updated and descriptive financial records and statements as well as the necessary-to-be-known financial ratios. 


2. Consider the Lender’s Perception of Risk
   
   There are factors that may influence your lender’s perception of risk. Consider yourself to be the lender and ask yourself questions like:
   • Can my business repay the loan?
   • Can I repay the loan if the business fails?
   • Is my business having the ability to manage its cash flow?
   • Does my business have a profitable performing history?
   • Who all are my potential or current competitors?
   • What are the strengths of my competitors?
   • Do I have good credit ratings?


3. Plan the Business-cum-Financial Plan
   
   If you get satisfactory answers to the questions above, you should put a step forward to plan the business, plan the finance. A business plan shall be devised in such way that it includes the specific strategies induced to improve the on-going financial operations as well as increase the efficiency of the business. The business plan shall be feasible in a way that the ratio of income to the cash flow remains profitable.

What it really Mean to be Financially Free?

In simple words, financially free means free from any financial obligations, which may include overheads, debt, income and expenses or anything financial. In a country like Australia, it is just a small matter how people perceive it. However, it is more important to know how to become financially free depending upon your individual situation.

• A Debt-free Life
It does not mean that you are financially sound if you are debt free; instead, you still have to work and earn money to meet up your living expenses as well as the taxes. The first thing that matters to be financially free is living a life without any monetary obligation. This can only be achieved if you pay everything you owe on time and maintain a clean credit history.

• Your Income Your Expenses
If your expenses are more than your income then you are far from being free from anything financial. Managing your expenses in the best possible way and contributing a part of your income to your savings account will help you to achieve the goal of becoming financially free.

• Assets are Important
Your financial assets like shares, mutual funds, investment bonds, properties are financial tools to generate annual cash flow whenever you want. By the time you reach old age, these assets prove worthy to help you meet your expenses in a convenient way. If you haven’t done something like this yet, start doing it as soon as you can. Assets are also the important milestone in becoming financially free.

If we go by the books, there can be lots more to do in order to live a life with financial freedom. However, most of the times it depends on circumstances and situations every individual face. Living life financially free is not an easy nut to crack. It takes hours of planning and consideration of numerous factors to walk in the path of achieving it.

It’s better to seek help from professional finance specialists who can figure out the most suitable way for you as per your needs.