All you need to know about Loan management
Determine the amount of loan you want to take. The decision should be based on the economic activity you are engaged in and for which you want the loan.
Identify the Bank which suits the loan amount and nature of loan you want. Is a microfinance or corporate loan. This should help you negotiate the interest rates to paid and the loan payment terms that are favorable for your business.
Avoid borrowing in foreign exchange if your business/economic activity does not earn you in foreign currency. Otherwise you will struggle to pay meet your loan obligations if the shilling depreciates.
When you get the money (loan ) applied for, please avoid the temptation of diverting the funds from the initial purpose for which the loan was acquired. Diverting the loan to a different purpose may lead to loss of the funds and increase your chances of default.
If, within 10 working days of acquiring the loan, you realize you no longer want the loan, please take back the money back to the bank. This is called cooling off period/window. You will only be charged not more than 5% of the total loan amount as the cost of processing your loan but you will not pay interest since you have not utilized the money.
If you decide to go ahead and utilize the loan, stick to the payment schedule agreed upon with your bank. Any diversion from the schedule may result into delayed instalment payment with accompanying penalties for late payment.
If you experience difficulty in your business and therefore find trouble in paying your loan instalments on time, visit your bank and renegotiate the terms of payment. This is called loan restructuring. You can be given a longer payment period and lower instalment to pay.
If conditions continue to worsen and you cannot fully service your loan (for instance if fire guts your business and your business hope are beyond recovery), engage the bank for you to liquidate your security/collateral instead of your bank liquidating for failure to pay. This helps you to sell your property at a reasonable market value to enable you pay off the loan and remain with some balance which can enable you to start all over alone. However, if the bank forecloses on your collateral, it will most likely be sold at forced sale value just to enable them cover their loan amount faster.
26 авг 2024