To achieve success in a business venture, you need more than your thinking skills, grand ideas, and connections with others. You must have sufficient resources and funds to start your business and be a certified entrepreneur.
There is a point in our lives that we are lost and do not have any plans concerning our future. Some may experience having depression or anxiety due to their lack of initiative in getting things done. We cannot blame others because some of them experienced failure after failure. But we can offer them our help and guide them to find their purpose in life. If we are lucky, some of them may realize that it is not yet over to start again.
Since the occurrence of the Global Financial Crisis, there are a lot of businesses and companies that filed for bankruptcy and insolvency proceedings. Others are still in huge debt from the loans that they acquired in different banking institutions just to fund their business.
Another hurdle in today’s economic situation is the impact of the COVID-19 pandemic. Click here to know the significant changes in the economy due to the spread of the COVID-19 virus in Europe and all around the world.
Impact of Financial Crisis on Business Owners
Most of the funding opportunities may not push through due to the increasing struggle in raising funds and looking for investors. Some people are too scared to risk their money or pursue an investment while the economy is still unstable and the stock market is completely red. Hence, many of the businesses are shutting down due to a lack of funding and resources to pay their workers.
You may have witnessed the closing of your favorite coffee shop, or the restaurant that you always book whenever there is a special occasion in your life. Some shops are also pulling every fund that they have just to continue operating even if there are tons of health protocols that they need to follow and limit the number of customers that they can accept.
Still, there are business owners who remain hopeful and persistent in applying for loans that they can have to save their legacy and keep their shops running even if there is a global financial crisis going on in every part of the world.
Due to the drastic changes brought by COVID-19, the government should take action in helping entrepreneurs and small businesses to start over. Some are badly hit by the pandemic and others are completely exhausted due to the lack of funds and resources. There must be an initiative that will come from the government in providing concrete plans in helping the economy rise again.
In line with this, there are different types of loans that you can avail of from various banks and lending companies. This link will direct you to a website that will provide relevant details about loans: https://www.forbrukslån.no/sms-lån/ not to mention, the discussion about the relevance of SMS loan in the banking business.
Some of these include working capital loans which can be availed of for short notice or any urgent matters. Another is fixed asset loans that are allotted for buying assets wherein the subject property is also considered as collateral for the said loan.
Additionally, you can also opt for factoring loans and hire purchase loans that are based on the amount owed to your business venture by your customers and purchase assets like pieces of machinery or vehicles.
But before applying for the loan that you want, you must consider first its advantages and disadvantages. In this way, you can weigh the pros and cons and decided which the most suitable loan is for you.
Advantages of Loans
If you are incapable of paying the amount that you borrowed, your loans can be paid instead of the collateral that you presented in your application. Through this, you don’t have any debts that you need to attend to.
Moreover, at the beginning of your contract of loan, you can still negotiate regarding your payment scheme and the imposition of interest rates. A repayment holiday is an example of paying interest in a given time while repayments on the capital itself are frozen by the bank.
Once you are settled, you can pay based on the terms of your contract and still earn money for yourself. We should be responsible enough in paying our debts because our names are also on the line. If we break our promises and did not follow the terms of the contract, there is a tendency that we will be labeled as having bad credit and no more loan applications may be granted under our name.
Lastly, applying for a loan in the digital era became very convenient. There is what you call an SMS loan wherein you can just attach all the requirements and documentation that the bank needs for the credit approval.
Afterward, you must sign the loan agreement which is sent by a bank representative that contains all the terms and conditions of the loan. You can send it back through email after signing. It will only take a few hours before you can receive a decision from the bank whether it is approved or not.
Additionally, you may now check the status of your bank account on its mobile application which is now called online banking. It also offers various banking services such as sending and receiving money. You can also view your balance in real-time.
Disadvantages of Loans
When you borrow a large amount, you can expect that the interest attached to it is also in high value. Sometimes the borrower is already having a hard time paying for the interest that there will be no means for him or her to pay for the original amount that was borrowed from the bank.
Furthermore, almost all types of loans are not flexible. There is a situation wherein you are paying interest on the money that you are not using. That is why you need to think and evaluate your financial capacity before contracting a loan with a banking institution or lending company.
Cashflow problems may also arise because of the delay in payments. Most of the borrowers are still looking for money to pay for their monthly bills while paying for credit dues.
Furthermore, it is not a great idea to apply for a loan when you also have ongoing expenses. This may often result in difficulty in keeping up with repayments. If you still have regular work or your business is still making a profit, ongoing expenses should be best funded from the cash that you received as your salary or earnings.
Hence, it is very essential to determine when loans are not suitable for you and your business. If you do not have any means to pay for the amount that you borrowed, you may first reconsider whether you will continue your loan application or not. Because if you avail such credit without any source of income, it is as if you are getting money without any plans of returning it.