Whether you’re running a growing restaurant in the Short North or a tech startup in the Arena District, securing a business term loan can be a crucial step in scaling your operations in Columbus, OH. But while the prospect of access to funds is exciting, it’s easy to trip up along the way. At Viking Funding, we’ve seen it all—borrowers who rush in without considering all the angles. To help you avoid costly mistakes, here are five common pitfalls to watch out for when taking out a business term loan.

1. Overestimating Your Repayment Ability

It’s tempting to focus on the cash in hand, but many businesses underestimate the repayment obligations when they take out a loan. Whether you’re expanding your storefront in the Short North or purchasing new equipment, be sure to realistically assess how much debt your business can handle. Just because you’ve been approved for a higher loan amount doesn’t mean you should take it all. Factor in your expected cash flow and ensure the monthly payments fit within your financial capacity. After all, your loan shouldn’t leave you gasping for breath—focus on sustainable repayments that align with your revenue.

2. Ignoring the Total Cost of the Loan

We get it—terms like “interest rates” and “APR” can seem like a foreign language, but overlooking these costs can result in major headaches down the road. It’s easy to fixate on the loan amount, but don’t forget to calculate the total cost of borrowing. In addition to the interest, some loans come with hidden fees such as origination fees, prepayment penalties, and service charges. Before signing any dotted lines, make sure you fully understand all the costs associated with your loan. The last thing you want is an unexpected charge that eats into your profits.

3. Not Having a Clear Purpose for the Loan

In Columbus, many businesses—from craft breweries in German Village to service companies in the suburbs—need funding for specific purposes. Whether it’s inventory, marketing, or hiring additional staff, your business term loan should be tied to a clear, tangible objective. If you borrow without a clear plan, it can lead to wasted funds and a lack of measurable results. Ensure you have a purpose that justifies the loan and can deliver a return on investment, whether it’s expanding your operations or boosting your sales.

4. Failing to Shop Around for the Best Terms

Not all loans are created equal, and Columbus business owners shouldn’t settle for the first offer that comes their way. Take the time to compare different lenders and loan products. From traditional banks to alternative financing options, there are a variety of loan structures that might be more suited to your business. For example, revenue-based financing (like what we offer at Viking Funding) is often a more flexible option for businesses with fluctuating income. Do your due diligence to find a loan that offers the most favorable terms for your specific situation.

5. Overlooking the Long-Term Impact on Your Business

While short-term needs might drive you to take out a loan, it’s important to think about the long-term impact on your business. Will the debt hinder your ability to reinvest in future growth or adapt to changing market conditions? Will it affect your credit score or ability to secure other funding down the road? Think beyond the immediate infusion of cash and consider how your loan might affect your business’s financial flexibility over time.

Ready to Take the Next Step?

Taking out a business term loan is a significant decision for any business in Columbus, but with careful planning and a clear strategy, you can leverage it to fuel your growth. Avoiding these common pitfalls can ensure that your loan supports, rather than hinders, your long-term goals.

If you’re ready to explore your financing options, Viking Funding is here to help with fast, flexible, and straightforward solutions that fit your business’s unique needs. Call us today at 754-812-9181 to learn more about how we can help your business thrive.

At Viking Funding, we know that the right financing can be the key to unlocking your business’s potential—and we’re here to help you every step of the way. Let’s make your vision a reality.