Loan EMIs are eating my profit
A loan should help the business earn more. When the EMI is bigger than the extra profit, it does the opposite.
Loans are easy to get today, and EMIs feel small when you sign. Problems start when sales slow and the EMI doesn't.
The test before any loan
Compare the EMI with your monthly profit, not your sales. If the EMI takes more than a third of a normal month's profit, one bad month can push you into trouble.
If you are already stretched
- List every loan with its rate and EMI. Pay the most expensive first.
- Speak to your lender early about restructuring. Waiting makes it harder.
- Don't take a new loan to pay an old one without a clear plan.
For major loan decisions, speak to a qualified adviser.
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