7 Reasons Why a Small Business Loan is a Good Idea
1. For Expansion
If your business is currently successful and you want to take the next step towards building it you should consider obtaining a small business loan in order to expand. Expansion is usually for those businesses that are not only profitable but have the numbers to show that they will continue to grow in the future. Expansion generally happens when a business decides to purchase more real estate in order to accommodate their growing operations. The idea is that if a business has a larger location they can expand to fill the location and their sales will expand as well, which is return will make them more money.
2. For Equipment
Purchasing equipment for a new company or updating old equipment can be extremely costly and unattainable for a new business. If your business requires lots of new equipment to create and sell your products then a small business loan is one of the best options for you. A loan will allow you to lease or buy new or used equipment; just make sure you do a cost-benefit analysis so that you can make the best decision for your business.
3. Purchase Inventory
If you’re running a retail business then taking out a small business loan to purchase inventory is a very common practice as purchasing enough product to fill an order or a store can be very expensive. Taking out a small business loan is particularly beneficial for those businesses that sell seasonal products, if your store is only open for a couple of months a year then a loan can allow you to have all of the inventory you need right away. This type of loan is usually short term as companies tend to make enough money during the season to pay off the loan as soon as the season is over.
4. Increase Working Capital
If you’re just starting out and your business is brand new you might not have the working capital to pay for the daily operations of your company. Most small businesses need to take out a loan to cover these daily expenses until they start making enough money to cover them. Eventually a business will start making enough money so that it will be able to both produce its own working capital and pay back the loan. Keep in mind that a working capital loan will probably have a higher interest rate because they are seen by some lenders as risky.
5. Consolidating debt
Starting a new business or even trying to revive a failing one is not easy and not cheap. In the years you’ve devoted your time and money to helping your business success you’ve probably also racked up a lot of debt, employees, product, store fronts and ware houses can be endlessly expensive. A small business loan is a great way for you to consolidate all of your debt into one easy to handle monthly payment. A loan could be exactly what you need to free yourself from the stress of all your debt and focus all your energy and time towards building your business.
Marketing is a great way for a small company to get noticed. Getting noticed and getting the word out about your business can be the difference between success and failure; if people don’t know anything about you or your business then it’s probable they won’t chose to work with you over another company. There are plenty of ways to market your business including online, on TV, the local paper and radio, but the problem is many of these options can be quite expensive. A small business loan will allow you to be able to afford marketing to get your name out there and therefore help build your business and increase your cliental.
If your business has a store front and you rely on walk-ins for most of your sales or income then having an updated location with great visual appeal could be a great asset to your company’s success. Redesigning and redecorating a retail store or office is expensive and you might not be able to pay for the updates out of pocket but a small business loan can help you pay for the updates and grow your business at the same time.
Taking out a small business loan is a great way to build your business and can be extremely beneficial both now and in the future. Investing in your company by taking out a loan will allow you to do all the things that you know you need but can’t quite afford on your own, including purchasing new and up to date inventory and marketing campaigns. A small business loan will help grow your business into the company you want.