5 Reasons to Get a Small Business Loan

Whether your small business venture is just now launching or if it’s been in operation for some time, an influx of cash can help you accomplish things that benefit the company now and in the future. One approach to small business financing that you can consider is securing a loan. Here are some examples of how you can put the proceeds from a small business loan to good use.

Reorganize Current Debt

Even start-up operations can accumulate debt a lot faster than most people think. While you have money coming in that makes it possible to honor your obligations so far, it’s sometimes difficult to make sure everything is covered. That limits the amount of net income you have on hand to pump back into the business itself.

One of the ways you can improve the situation is to get a small business loan, and consolidate all or most of those debts into one manageable monthly payment. Depending on the terms and conditions that come with the loan, there’s a good chance you will end up paying less in interest. Couple that with the fact that managing the debt will require less time and effort on the part of your accounting team and it’s easy to see why this solution is so popular.

Remember that the lender will be reporting your payment activity to the major credit bureaus. In this sense, using a loan to pay off unsecured debts and making sure the loan payment is tendered on time every month will increase the company credit score. That’s another benefit that will serve you well in the years to come.

Purchase Additional Inventory

While you have the raw materials and finished goods on hand to manage most of your obligations to your customers, what would happen if a new client placed an unusually large order? Would you be able to obtain the additional materials needed to produce the appropriate volume of finished goods? Where would the money come from to purchase those essential materials?

You could choose to secure a small business loan; and cover the cost of materials, labor, and even the shipping associated with that large order. The beauty of this arrangement is that you don’t have to consume all the resources you already have on hand. That makes it easier to avoid the risk of falling behind on the orders already submitted by your growing roster of clients. It also means you will not find your company in a temporary financial bind if that high-volume customer requires a 60-day payment schedule versus the traditional 30-day arrangement.

You can work with the lender to ensure the first payment or two is made as you produce the goods and ship them to the client. Once you do receive the payment from your client, it will be easy enough to settle the remaining debt in full and know where to go if the same situation arises again.

Buy New Equipment

You started your new business with aging equipment that was still capable of doing a reasonably credible job. Now that your client base is growing, that older equipment cannot produce the volume needed to keep up. You need new equipment in order to remain competitive and eventually earn a larger market share.

For example, what would it be like to own a bakery but not be able to fill the orders that seem to be stacking up a little more each day? If you look into options for business bakery financing, you will find loans that are perfect for purchase newer equipment and allowing you to produce the baked goods needed to keep up with the demand.

Use the loan proceeds to do more than upgrade to match your current need for production. Project the upward trend in demand and invest in extra equipment that will keep you competitive for the next couple of years.

Acquire More Real Estate for Your Growing Operation

Your small business is about to outgrow the current location. If you are to remain a viable entity and be able to reach out to more customers, there must be more space for clerical, accounting, and production facilities. Your best bet is to find a location where there is plenty of room for expansion. The problem is that such a project will take funding.

A small business loan can help you purchase real estate that is ideal for your growing business. The money can be used to buy the property and make any updates or modifications to the buildings with relative ease. In a matter of months, the new facility will be ready and you can move the entire operation to the new headquarters.

Launch a New Marketing Campaign

Even with excellent word of mouth from your loyal clients, the only way to reach a wider audience quickly is by mounting an aggressive marketing campaign. Since this type of effort takes money, choosing to secure a business loan makes a lot of sense.

Instead of having to carry out each phase of the campaign when you have spare cash, launch it immediately. Tailor it to include any type of media outreach that is likely to connect with your targeted consumer base. Depending on how well your effort is received by consumers and how well your products work for them, there’s a good chance of experiencing an upswing in collected revenue by the time you have made one or two payments on the loan.

These are only a few of the ways that a small business loan can make a difference in the stability and growth of your business operation. Talk with a lender today and explore how a loan could help you with a specific need. Pay close attention to what sort of returns you can expect from whatever project you want to fund and see how it will provide benefits long after the loan balance is settled. With the right plan of action and a reasonable amount of financing, taking the company to a whole new level will be simpler than you think.

Leave a Reply