How many business loans can you get?

Running a business can require significant financing and it’s likely that you may not have all the funding you need on-hand. If you’re an entrepreneur who already has a business loan and finds it to be insufficient, you may be wondering whether you can get multiple business loans. Chances are, you’re asking yourself how many business loans can you get? Fortunately, it is entirely possible to obtain multiple business loans.

How can you benefit from having multiple business loans?

• Applying for multiple business loans can afford you the flexibility of obtaining funds quickly. This can be useful if you face a period of unforeseen difficulties that need to be handled straight away.
• Multiple business loans can also benefit you by allowing you to improve your credit. If you consistently make timely payments, this can quickly improve your credit score.

What are the risks of having multiple business loans?

Lenders may allow you to apply for multiple business loans, but you should exercise due diligence as this can present its own risks.

• Applying for multiple business loans is referred to as ‘loan stacking’, and this does involve some risks that should be taken into consideration. For instance, having many business loans with similar characteristics and terms can make it difficult for you to make the required payments. Also, if you have multiple loans to repay, this could significantly affect your cash flow. Whatever money you have coming in will be used for the payments you have to make.
• Another risk is that depending on the terms of your first loan agreement, having many sources of credit could violate these terms and force your initial loan into default.

Alternatives to applying for multiple business loans

1. Ask your current lender for additional funding: Before taking out an additional loan, it is always wise to ask your lender if it is possible to increase your current funding. Generally, if 50% of your current loan has been paid back on time, your request for additional funding has a good chance of being approved.
2. Refinancing your loan with funds from another lender: Refinancing your business loans means having a new lender pay off the remaining debt you have with your old lender(s). If you choose to refinance your loan, all of your debt will be under one interest rate, which could even be lower than the interest rate on your first loans. This also means that instead of having to make multiple payments, you still only have one payment schedule to follow and deal with a single lender.
3. Combine complementary loan products: Combining different kinds of financing products can benefit you because these products will have different terms and collateral. For instance, you could apply for:

• A business loan and a line of credit from the bank
• A business loan and a business credit card
• A business loan and a short-term loan

All in all, while it is certainly possible to have many business loans, you should weigh the risks and make sure it’s the best decision for you. While more business loans means more financing, it also inevitably entails more risk. Before applying for multiple business loans, you should first try the alternatives discussed above and consider applying for a complementary loan product instead.