It doesn’t matter what you do. If you are considering getting a business loan, people are going
to have an opinion for you. Some may be good and some may be bad, but you are certain to
find out that everyone you know is a financial expert.
The truth is, a business loan is always unique to the business and the situation, so there is no
real reason to compare. When it comes down to it, this is a decision that you need to consider
for yourself, but there are some very concrete situations in which a business loan would prove
extremely beneficial to your cause. If you’re looking into getting a loan, here are some solid
ways in which it could benefit your business…
1) You’re Looking Into Expansion
Whether you are a restaurant or retail store that can’t fit all of their customers into the door, or you are an office that is running out of real estate for its new team members, it might be time to consider expansion. This could mean moving on up into a larger space, or it could mean opening another location entirely. Either way, the upside is that your business clearly has the demand to make a big leap, you’ve just got to find the capital to make that happen.
This can be a really big step for your business. Finding a larger location or adding another location entirely can put your business into another echelon of production and revenue. If this is where your business is headed, make sure you carefully calculate this change in funding. What is your likely uptick in revenue going to look like? Is it going to be enough to cover the expenses of the new location in addition to your loan payment? If the answer is yes, the time might be right to pull the trigger.
2) You Want To Build Credit For Your Business
You never know what the future will bring. If you are looking into a larger scale loan a few years out, or you just want to prepare yourself for the unknown, a smaller loan can be an amazing way to start building up your credit. The earlier you can start building, the better, because you never know when the time may come that you need a more significant loan, and if your business’ credit history is scarce or nonexistent, you might not be able to make it happen when it counts.
Another benefit of building credit early is the potential of building a relationship with a lender. That can also serve as a bridge later on to assist with securing a larger loan. It is important to take precautions though. Be certain that the loan you take on is one you can afford, because any late payments early on could make a significant impact on your credit.
3) You Need To Invest In New Equipment
Equipment is one of the singular most important additions that you can bring to your business. No matter what industry you are in, your equipment has a direct impact on the speed, quality, and potential production of your product. If the opportunity arises to invest in a piece of equipment that will significantly improve your business, it should be a no brainer.
Before you take the leap into a new set of equipment it can be a good idea to take a close look at your needs against things that may just be nice to have. If it isn’t going to have a direct and tangible impact on your business, it may be a good idea to reconsider.
4) Purchasing More Inventory Is A Must
Inventory is one of the more expensive parts of owning a business, but at the end of the day it’s what keeps your business going. Investing in quality products is what keeps customers coming back and allows your business to expand. In many cases, such as seasonal businesses and businesses based on tourism, you are going to see a very slow period before it starts to get busy. A business loan can be an absolute lifesaver to stock up before things really start to pick up and you can see a significant profit.
To see whether or not this is the right choice, be sure to create a financial plan. Create a humble prediction of what you will be able to sell and how long the season will last, so that you can make a proper decision on whether or not loan payments are in the cards.
5) You Need To Expand Your Staff
It gets hard trying to run the whole business by yourself. As your business continues to grow, you are going to have to bring on specialists to handle things such as the books and marketing. The simple fact is that there will come a time where you spread yourself too thin, and your business is compromised in the process. On top of that, hiring a specialist ensures that you’re going to see a more productive and innovative person in that role, so you are bound to see the benefits of that investment.
This is one of the reasons that you’ll be able to feel first hand. You will start to feel overworked, and likely in over your head in certain areas of expertise, and your workers will feel the same way. As long as you’ve checked to see there is sufficient space in the budget, this is one investment that pays for itself in time.
When it comes down to it, there are plenty of ways that business loans can take your business to new horizons. Every business decision comes along with some risk, but as long as you look carefully at your finances and have a good idea of the potential of future revenues, you can minimize the risk you incur with a business loan.