Repaying A Loan

Will i be expected to pay the money back in one lump sum?

As far as paying back the money you've borrowed is concerned, the interest on the loan you will probably be paying monthly and you should've already allow for the first three months of that when applying for your loan. As far as the capital is concerned, that's another matter, you can probably arrange to pay this off by stage payments, which means that you can pay it off a chunk at a time which is not quite so daunting.

What can I do if I can't make a repayment?

If you have any doubts about being able to make a repayment, then talk to your accountant immediately and arrange for the two of you to go and meet your lender. Agree on the approach you are going to make, which should include one or two possible solutions to this problem, which your lender can listen to and respond to.

What should I do if I need to borrow more money?

If you want to borrow money your first thought might well be to go to your existing lender. But it could be worthwhile looking around for another lender. But, well you know what I'm going to say. Don't do anything without talking to your accountant. However, this situation is not likely to arise until you've been going for a while.

What contingencies do I need to think about?

Your lender will want to know what's going to happen if, for any reason, your business fails. Perhaps you might have a fire, or one of your major customers goes bust and owing you money. In this situation your lender could well insist on the loan being repaid in full. This in fact is where you guarantor comes in. That's someone or something who backed up your loan to ensure that the lender get their money back in full. It might be a good idea for you to have some savings put aside as a sort of rainy day fund which you could call on if this sort of situation occurs. It's worth thinking about.