Put the money in a separate account. If you’re using your loan funds to cover ongoing operational expenses and purchases, you might want to place the money somewhere other than your primary business checking account. Essentially pretending the money isn’t there, and only transferring money as you need it, will prevent you from overspending, said Levi King, CEO and co-founder of business credit and financing company Nav (formerly Creditera).
“If you have to transfer money from one account to another — especially if it’s with different banks — you’ll think long and hard before you make that decision,” King said.
Set up automatic loan payments. Late or missed payments on your loan can really hurt your credit score, and make it more difficult for you to borrow money in the future. One way to ensure you stay on top of your loan repayment is by setting up automatic debits. Most lenders have an online banking system that allows you to do this, and as long as you know you’ll have the funds each month to make the payments, it will save you the hassle of manually moving your money around.
“[Auto-debit] helps ensure timely repayment and is one less thing for a small business owner to worry about,” said Mollie Gawronski, head of small business segment strategy for BMO Harris Bank. “In some cases, [banks can] offer better terms for customers who do that.”
Continue cutting costs and planning your budget. Don’t let that large bank-account balance go to your head: In the long run, continuing to save money, trim your budget and plan for your business’s future, even though you now have the funds to cover your expenses, will ensure you’re prepared for a financial emergency.
“Don’t assume that once you’ve got funding, you are all set,” King said. “Another big opportunity or problem can present itself tomorrow. Always be anticipating future funding needs, and look for opportunities to lower the cost of existing loans by refinancing for example.
Stephen Sheinbaum, founder of financial technology company Bizfi, noted that putting certain expenses like utilities on an equal payment plan, or looking into vendor discounts or early payoff plans can help you better manage your cash flow.
“Whatever savings you generate should go into your reserves,” Sheinbaum said.