Running a business means you need access to finance as and when required, but sometimes you may find it hard to source if you’ve had a tough couple of months. Merchant cash advance companies can be a useful tool if you’re trying to fund your business as they can provide you with what you need and fast. You can also borrow higher amounts too, so if you’re looking for a large lump sum, merchant cash advances can be brilliant. In the current climate, taxes are rising, and fast. But did you know that this can actually have an effect on your business finance? Keep reading to find out more…
Riskier Lending
With taxes increasing, the cost of living can rise too, making lending money more of a risk in the first place. Increased taxes can also affect businesses and their turnover, so your affordability might decrease which makes lenders view you as a risk. This might mean you don’t get approved for the first finance you apply for, so you need to be wary of having too many hard searches on your credit report. Make sure if you’re applying for business finance that you research the lender beforehand and get a good idea of their criteria. This will hopefully increase your chances of being approved, even if the tax increase has made a dent in your profits.
Higher Interest Rates
The rise in taxes will most likely mean that lenders may have to increase their interest rates in order to counteract any losses they’ve experienced. This might mean that if you borrow a business loan, you’ll end up with a higher interest rate during your agreed term. Your interest rate might also be affected by the risk it is to lend to you. As mentioned above, you might have less money after the rise in taxes, so your eligibility can suffer. Make sure you check out different lenders and their interest rates before applying as you don’t want to get stung by increased taxes and large loan repayments.
Increased Repayments
If the interest rates rise in turn with taxes, you’ll probably notice that a lot of financial lenders have increased their repayment terms. This will be to help ensure that they still receive their money back and make a profit, despite the higher taxes. Your increased repayments could also be to do with your affordability as it may have been decreased due to the increase in taxes. It will pay off to check out multiple lenders before committing to anything as you want to avoid extortionaterepayments wherever possible.
Longer Terms
In order to protect their own assets, lenders may make their agreement terms longer than before. This can be to help borrowers make repayments easier as then they can pay less each month, and the increase in taxes may make them subject to having less money. However, it does also mean that you’ll be paying more interest over a longer period of time so make sure you take this into consideration. A longer loan term may be more beneficial temporarily, but when you’re still paying it off years later, you may wish you’d opted for something with higher repayments.
Don’t let something beyond your control like tax increases have a negative effect on your business. There are ways you can avoid them to the best of your ability, they just take a little bit of time and effort.Overall, the rise in taxes may have some effect on your business finance, but if you do your research, you can still find a good deal and help support your business.
