Inside Money Today

Lendinero's blog on Growing Your Business

Business Finance: Avoid the 3 Biggest Mistakes Businesses Make When Seeking Business Financing

Business Finance: Avoid the 3 Biggest Mistakes Businesses Make When Seeking Business Financing

There are many mistakes that businesses make when obtaining business financing.

1: Not knowing what you will do with the money. Most business owners are not clear on the use of funds. The first step you need to take is to make sure you know where you want to invest that money.

2: Not knowing return on investment versus cost of capital. This is a very easy formula. You have to calculate how much of return you anticipate to make with the funds and in what time frame. Example: If you obtained $100,000 and you project to make 30% return in the next 3 months, that equals to 10% per month. If you pay 2% in interest you still make 8% per month not utilizing your own funds.

3. Expecting the worst.  You may make great projections, but what if your projections are wrong. Always assess the potential risks of your projections. These are just some tips that you can utilize when you are seeking business financing in order to avoid costly mistakes.

© 2015 Lendinero

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