Getting other loans once you have been funded with a commercial loan (loan stacking) will make it harder for you to lower your monthly payments and can put your business at risk.
We know there’s an abundance of EASY MONEY being offered to small business owners. You probably have been called several times by brokers trying to “sell you a loan” you can cash immediately. We advise against taking out multiple business loans within the first 6 months of closing your loan with Camino Financial. In this article, we will explain you why.
We understand that it takes “money to make money”, but the reason we advise you against “loan stacking” is because we don’t want you to overstrain your business or household with debt payments. When we approved you for a loan, we approved the max monthly loan payments you can make with minimal risk of default. We calculated this amount by reviewing your monthly “global cash flows.”
What can you do to maximize your cash flow without loan stacking?
Here are some non-debt alternatives you should consider to address cash flow issues in your business:
- Start forecasting your cash flows for 12 months. Click HERE to download a template and a watch a tutorial video.
- Take a close look at your financials to see if you can change your prices or costs. Don’t know where to start? Watch this short WEBINAR to get started.
- Contact your major suppliers to see if you can negotiate better terms.
- Pay all your bills on time to avoid late fees.
- Re-negotiate terms with your customers (sometimes you just have to ask for the payment sooner).
Frequently Asked Questions
What is loan stacking?
It means to take multiple loans, thus “stacking” them. In other words, loan stacking happens when you take out multiple unsecured loans or cash advances to address cash shortfalls. Increasing your monthly debt payments without consulting Camino Financial can be very dangerous and can result in putting your business at risk of default.
What are my global cash flows?
Global cash flows are the amount of your net business cash flows plus other household income, less fixed personal obligations (e.g. housing rent, car payments, and personal debt payments).
What if I didn’t get approved for the loan amount I requested?
We approved you for a lower amount because your global cash flows were less than the monthly payments resulting if we had approved your requested loan amount. The loan amount we approved ensures that your global cash flows exceed your monthly payments.
What if I have an opportunity to take on a contract that will increase my revenues?
Give us a call: (213) 634-3019. As your financial partner, we want to help you think about the impact the contract will have on your operations, people and cash flows.