small business loan

All businesses, large and small, require capital to cover costs and fuel growth. When cash isn’t readily available, borrowing money is the quickest and easiest solution. But is it the wisest?

When it makes sense to secure a business loan

There are instances when securing a loan is a sound business decision. The key lies in the company’s ability to pay back the money and still make a profit.

Here’s when going into debt for a small to medium-size business makes perfect sense.

Funding growth

Using small business financing to cover the costs of new machinery, equipment or tools is a sensible move. Similarly, taking a short-term business loan to invest in fresh talent drives innovation and the competitive edge. So, too, does upscaling capacity to tackle an exciting new project.

The only proviso is the investments enabled through the loan must add extra value to the business or boost the bottom line.

Leveraging opportunity

Borrowing money to take advantage of a business opportunity with long-term benefits is always a good move. Funding a new business acquisition or using a loan to win a tender or kick-start a profitable startup can strengthen the balance sheet in the long run.

Bridging a short-term cash-flow shortage

When accounts receivables are in good shape but there’s a delay in collections, a short-term loan is the answer to covering operational costs and payroll. Once the payments roll in, the loan can quickly be paid off.

When a business loan doesn’t make sense

When all available funds are exhausted, and existing lines of credit are maxed out, going deeper into debt is not the answer. This is especially true for businesses that have no imminent financial lifeline.

A simple rule is – don’t borrow capital the business can’t afford to pay back. Loan terms can be punitive. If a business defaults, its assets are at risk.

Good questions to ask a business loan provider

Before committing to a short-term business loan, pose these questions to the finance provider.

  • What’s the total cost of the loan, including origination fees and interest?
  • What are the terms of the loan?
  • How long does the loan application take?
  • When is the first payment due?
  • What documents are required to secure a loan?
  • Are there penalties for settling the loan early?
  • Do you report the loan to credit agencies?
  • How long have you been providing loans?
  • Are you a registered loan provider?

Why opt for an asset-based business loan from lamna

An asset-based loan from Lamna is a quick, easy and affordable way to raise business capital. Unlike traditional business loans,

  • applications are processed within 24 hours
  • no supporting documents are required
  • loan transactions are completely confidential
  • no hidden fees or early settlement penalties apply.

When a small business loan makes sense, we can help. For more information about using an asset to secure a short-term loan, contact us on 086 111 2866 or simply complete and submit our online application form.

Illustrative example

Client borrows R10,000 for 90 days.

Loan Amount Repay Terms Monthly Repayment Total Repayment Initiation Fee Monthly Fee
(Interest + Service charge)
APR
R10 000 3 months R568.40 R12 902.20 R1 197 R560 60%

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APR & Loan repayment period

Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.

Renewals

All accounts may be renewed if they are up to date.

Collection

All payments are made via EFT or direct deposits into Lamna’s bank account. There are no debit orders.

Non-payment

Non-payments may result in the matters being escalated.

Illustrative example

Client borrows R10,000 for 90 days.

Loan Amount Repayment Period Monthly Repayment Total Cost of Loan Initiation Fee Monthly Fee
(Interest + Service charge)
APR
R10 000 3 months R568.40 R12 902.20 R1 197 R560 60%