As an entrepreneur, there are many reasons why you might need external financing. Perhaps you have the chance for a larger premises that would increase your turnover. Would you be able to serve more guests with a larger outdoor seating area or do you want to buy a large warehouse for Christmas shopping? Borrowing can be a wise business decision. Here are some good questions to ask yourself before you decide.

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What is the best way to use a loan?

As a business owner, you often know best where your money can do the most good. Perhaps another hairdressing chair would make a big difference to your profitability? Or would a new restaurant oven increase your efficiency? The most important thing is that the loan is used wisely, opens up new sales opportunities and that you have thought through the risks before you borrow. Borrow only for exactly what you need. Don't borrow to solve an acute crisis.

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Will the loan pay off?

A profitable loan provides leverage through increased sales. The only way to find out is to calculate possible additional sales and costs. How many more lunches do I need to sell to make the new outdoor dining area worthwhile? How many additional sales does the new website need to generate?

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What will it cost?

The cost of the loan will vary depending on the solution you choose. Be sure to include all the loan fees. For example, for bank loans, these can include interest, arrangement fees and invoice fees. The time you spend writing the loan application, business plan and administration is also a cost.

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Will I be able to pay back?

Never take out a loan without doing a thorough analysis so that you feel confident that you can pay it back. Calculate what the repayment means for your cash flow. Also consider what it means if the investment does not produce the expected effect.