business loan

Spend Wisely: How to Make the Most of Your New Business Loan?

Debt is like a wound in your body. If you don’t attend to it immediately, it’s bound to fester and doctors may have no other option but to cut an arm and a leg if need be. There are no doubt loans can help you, especially true if you’re just starting as a business. Even the biggest firms in American, the biggest brands, do borrow — and by the billions. But what has become apparent is if not handled well, loans can be counterproductive.

Take the story of Ford Motors, long hailed as an American darling powerhouse. The company founded by no less than Henry Ford is drowning in debt. The problem is with the pandemic around, sales have not been the best of help so incoming money is at best flowing to a trickle. Facing increasing competition, the company that has stood the test of time since its founding in 1903 is but inches away from going under and filing bankruptcy. Already, Moody’s, S&P, and Fitch have lowered Ford’s overall credit rating into speculative, just about the equivalent of junk.

Luckily, there are better ways to handle your newfound money than wasting it all away. With due diligence and a little patience, you should be able to channel the money to where it’s meant most: to grow your business.

A Separate Account is Best

Take note that if big companies can have loan problems, so can you. When Henry Ford started his company in 1903, he was a trailblazer. His methods of assembly line manufacturing supercharged the industry so much what used to take half a day to produce one car can be done in but 1.5 hours. No doubt Ford Motors is one of the biggest companies in America. Still, that did not exempt it from loan issues.

So a good start for you is placing the new loaned money in a separate account. Thus, if you’re planning to use the money for operations and other purchases, it would be wise to put it in an account other than your company’s primary checking account. That way there’s little chance for you to overspend as you’ll have to transfer money only when you need it.

That act can be a lifesaver. You’ll have to think twice before the money gets transferred.

Cut Costs and Plan Your Budget


Attitude is everything. If your line of thinking is you have a big fat account then you’re bound to overspend. Instead, continue to focus on how you can save money. By trimming your budget and planning your business expense, you ensure your company doesn’t go under in challenging times.

Never assume that you’re already all set as you have acquired the funding to get things rolling. You really can’t predict what will happen tomorrow. That is the lesson Ford Motors has to deal with the hard way. When the virus happened, the American company found itself bound in ropes. Without robust sales, it didn’t have the money to pay its debts.

Cutting costs and upgrading your production methodologies should not work against each other. For instance, take automation. You might think it’s expensive to automate but if it can give you generous savings down the road, it can be a worthy investment.

Servo pump filling machine is a good example. When you look at how accurate and how fast the machine can fill a series of containers, you know it would come out a lot cheaper than when hiring dozens of workers. Best of all, you do away with human error. You’re assured products are produced with accuracy and with brand consistency.

Set Up Automatic Loan Payments

Whether you like it or not, paying your loan is something you’ll have to face. Not only will late or missed payments hurt you when paying your loan, but also can have long-term effects. You can forget about taking another loan in the near future.

A good way for you to stay on top of the paying game is to set up automatic loan payments. These automatic debits mean you won’t have to forget to pay a single day on your monthly obligations. The good news is most lenders can help you set things up with their online banking system. That can certainly save you a lot of hassle, not to mention a lot of stress. Just make sure you have the amount in your bank for an auto deduction.

Never Spend Just Because You Can


A small hole can sink a big ship. If you continually spend your loaned money here and there without thinking of the consequence, things will add up. A little $100 there and a little $50 here can total thousands if you’re not careful. Before you know it, you’re bound to be in the position where you started: out of cash.

Taking out a loan can be a good start. That’s assuming you handle the money right. If you do, not only will you be able to pay your loan plus interest, but also you’ll see your business grow by leaps and bounds.

Scroll to Top