Use Caution Before Signing Your Lease
Starting a small business can be an exciting and rewarding venture, but it can also come with its share of challenges. One of the biggest hurdles that entrepreneurs face is securing financing for their new venture. Without proper funding, it can be difficult to get a small business off the ground, let alone turn it into a profitable venture. As such, many entrepreneurs opt to secure a small business loan to help fund their venture.
While securing a loan is an important step, it’s crucial not to sign a lease until you get approved for the loan. Signing a lease before securing financing can lead to serious financial problems down the road. Here are a few reasons why:
You may not get approved for the loan
If you sign a lease before securing financing, there’s always a chance that you won’t get approved for the loan. This could be due to a number of factors, including poor credit, lack of collateral, or insufficient revenue projections. If this happens, you’ll be stuck with a lease that you can’t afford to pay for, which could lead to legal trouble down the road.
You may not be able to afford the lease payments
Even if you do get approved for the loan, you may not be able to afford the lease payments if you signed the lease before securing financing. This could be due to unexpected expenses or a lower-than-expected loan amount. Either way, if you can’t afford the lease payments, you’ll be in default of your lease agreement, which could lead to legal trouble and damage your credit score.
You may have trouble negotiating lease terms
If you sign a lease before securing financing, you may have trouble negotiating favorable lease terms. Landlords may be less willing to negotiate if they know you’ve already committed to the lease. However, if you secure financing first, you’ll have more negotiating power and may be able to get better lease terms.
In conclusion, securing financing for your small business is an important step, but it’s crucial not to sign a lease until you get approved for the loan. Doing so could lead to serious financial problems down the road. Take the time to secure financing first, and then negotiate favorable lease terms that work for your budget and your business goals.