You went through the underwriting process and you managed to secure a business loan – what do you do now? 

Arguably harder than getting a business loan is paying it back. The monthly payments can take a large chunk of your business’s revenue, and it’ll take quite a bit of planning to make sure you’re on time and keeping up with payments. Here’s our definitive guide to after you receive your loan. 

Try to Pay More Per Payment

That’s a given – if you have the ability, try to pay more than the recommended monthly payment. If you can’t afford to pay significantly more, try just simply rounding up each payment term. For example, if your payment is $365 a month, go ahead and pay $400 a month. This $35 extra per month can add up, and help you pay off your business loan quicker. 

You can also try to make one extra payment per year. Ideally, this should be about the size of your usual monthly payment or larger, that way you can really put a dent in the total amount. 

Before you do this, however, make sure the business loan you’re paying on doesn’t have penalties for prepayment. Some lenders require fees for prepayment because the loan isn’t acquiring as much interest over time. 

Set Reminders

Many lenders allow your bank account to be auto-drafted for your payment every month, but if that’s not your thing, make sure you’re remembering when your payments are due. Make the correct adjustments to your cash flow to make sure you’re all set – if your loan payment is due the same time as your rent, make sure you’ve planned for that and set aside money.

Setting reminders on your phone are the best way to keep up, that way you’re consistently notified every month. Even if you have auto-draft, make sure you’re aware of when your payments are drafted, so your bank account has enough funds. 

Build Your Credit Score Via Your Business Loan

Remember, business loans aren’t only about paying for things – they’re also vital in building your credit score. Keep that in mind every time you make a payment. If you miss a payment or pay late, your credit score gets penalized. The more consistent you are, the more this “good behavior” will reflect in your score. If you can keep a good score – or increase it – then you’ll be able to attain future funding or refinancing at better rates. 

Make a Business Plan 

Use the money you just borrowed to grow your business. Business loans are meant to be investments in the future, so the best way to ensure that you’re using them to their best potential is to make a detailed plan of how you see your business going in the next few years. Layout how you want to use the money – whether it be for equipment purchases or for investing in new opportunities, you want to make sure you keep track of where you’re spending it and if it’s going to contribute to growth. 

Look Into Refinancing

This something to think about longer down the road. Once you’ve paid a good bit on your loan and your business is making more in revenue,  it could be a good plan to try and refinance your loan to get a lower interest rate. If you’ve been paying on time and your credit is improving, it’s an even better reason to refinance. As your credit improves, lenders will usually give you better interest rates. If your business is more well-established, you might want to look into getting an SBA loan to refinance, they’re usually the lowest-interest business loans on the market. 

How you use your loan is up to you, just make sure you’re really thinking about how you spend. Loans are meant to be opportunities, not hindrances.

Want more direction on how to use your business loan, or are you looking to get a business loan? Check out FaaSfunds proven software to help you find the right loan for your business, or speak with one of our finance experts today.

We keep mentioning our “FaaSmatch” algorithm – it’s how we match your business to the best lending options out there. But how exactly does it work? Let’s break it down.

The “FaaS” in FaaSmatch stands for “Financing as a Service,” which is what FaaSfunds does. We’re taking the broker out of getting a loan, and making it easier for you and your business to find the lending options you need. We’re a business-to-business service, and our finance-matching is the service we offer.

FaaSmatch is an algorithm because it uses software analytics to automatically sort through your financial information and compare it to our lending marketplace. This way, based on data points, it can match you up with the lender that will give you the lowest rates and best terms, along with the best chance for approval. By using this automated process, you can instantly see how different lending options compare, and you can understand which one will work best for your business.

Let’s Break it Down

What is an algorithm? By definition, it’s a process or set of rules to be followed in calculations and other problem-solving operations. They’re created by constructing a set of directions, much like a map, that can be reduced to three logical operations – “and,” “or,” and “not.” You can use algorithms to solve a Rubix Cube, or you can use algorithms to run search engines.  Algorithms are everywhere. They’ve become a colloquialism. They determine what’s advertised to us and they determine what shows up in our news feeds. FaaSfund’s algorithm is different. We saw the need for an easier way to find lending options, so we spent countless hours dedicated to doing just that.

Our algorithm, called “FaaSmatch,” is a set of programmed commands that looks at financial information and compares it to data from lenders. It looks at credit and other financial factors and analyzes it alongside compiled information from our lenders to determine which loan and lending options make the most sense for each business’s financial situation.

The Goal of the Algorithm

Stefan Friend, head of product development at FaaSfunds, explains that the goal of the FaaSfunds algorithm is to help users make informed decisions.

“It’s a simple way to match a business’s credit profile holistically to the right financial products for them,”  said Friend. “Using a proprietary algorithm, we take a close look at a business credit profile and score and weigh them against the criteria for certain financial products.”

This makes the funding process quick and easy, and without the need for a broker or extensive paperwork. The FaaSfunds algorithm automates the funding process so the business owner is in charge of their own funding, but FaaSfunds lets them see what their best option is.

“Ultimately what this does is help them have a better view of the best product for their business,” said Friend, “and allows them to have a firmer grasp on their business’s financial future.”

Take a look at FaaSfunds today and see just how well the FaaSmatch algorithm works for you.

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FaaStrak, LLC and affiliate FaaSfunds are software providers that exist to facilitate funding and help you make financial decisions for your business. The views, reviews, recommendations and suggestions expressed in our articles aren’t in any way affiliated with certain products or companies, and are based on the view of our editorial team alone, not FaaStrak, LLC as a whole. We do not take endorsements from products or companies mentioned above. We give advice based on research and industry knowledge, but the finance world is vast and variable, so we do not claim to be experts at everything within it. We are here to guide and provide direction, but are not here to enforce our knowledge as fact. We cannot be held liable for decisions made by you or your business. Under no circumstances should FaaStrak, LLC or any of its affiliates be liable for any indirect, incidental, consequential, or exemplary damages or loss of profits arising out of or in connection with your access of our site or software.