You have your own business, maybe it’s a store, a restaurant or an agency, but something seems to be off; it seems to remain stagnant.
This isn’t necessarily something bad, it doesn’t mean impending doom or bankruptcy, it’s just that your business is not growing as much as you wanted it to. You know you could get a marketing team or hire more staff to boost your sales and grow, but you don’t have the funds to do it.
Should you kill your business growth dreams or wait until you have enough money saved up? Maybe you just need a bit of help.
What is a small business loan?
It is no secret that affordable funding is the key to the survival of most businesses.
In a world where most startups never live to their 5th birthday, it’s good to consider this form of funding when you are on a tight spot. Tough times in business, just like in life, do not last, but how you handle them will determine whether your business will survive.
A small business loan is a form of debt financing specifically provided to small business owners. These loans are ideal because their requirements are not as restrictive as regular loans so that most small business owners can access them.
Most of these loans come with flexible monthly repayments and low-interest rates. In some instances, some of them come with incentives that could reduce the business expenses at the end of the day.
Depending on how you plan to use the loan, you get to choose the kind that is ideal for your business needs. Each small business loan comes with different terms of repayment, depending on the lender. You have to take your time and do adequate research to ensure that you get nothing short of the best.
How can I get a small business loan?
First, you need to ask yourself why you need the money. You need to make sure you know exactly where will the money go once you receive it.
You should only go ahead with the business loan application if you know what to do with the money.
Make a business plan and budget, this not only will help to know where the funds will go to, but you’ll also know exactly how much money you need. Getting some extra cash on your hands without a good plan can be detrimental, especially because if you get more than you actually needed, you might have a hard time paying it back.
Once you know what you want, you can then find a loan suited for your business loan.
Compare different lenders and settle for the one that offers the best terms. You also need to ensure that you meet the minimum requirements and you have all your documentation ready. Proper research and preparation will increase your chances of getting the loan amount you need, so take your time, and ask for clarification where necessary.
Many lenders are willing to advance loans to small business owners as long as they meet the minimum requirements. Most of them just want you to provide relevant documents and fill in the loan application. If the amount you want is substantial, some financiers may require additional collateral in addition to your business’s financial reports.
Am I the right kind of business to get a small business loan?
A small business is defined as an entity that is established for profit, it’s independently owned and operated, has less than $7 million in sales, and comes with fewer than 500 employees.
This term is not just limited to startups. Even established businesses with all the above features qualify as small businesses and can benefit from small business loans. It does not matter what line of business they are in or what their daily operations entail.
If you think that your business could benefit from a loan, then your business is just the right kind of business.
Just remember you need to ensure that you fulfill the requirements set by the lenders and that you have a plan in place on how you are going to utilize the loan for the benefit of your business.
Where can I invest my small business loan?
A small business loan is designed to finance business operations.
There are many ways to use a business loan to power your business:
- For starters, you can choose to use the loan to purchase inventory.
- If you are in retail, the additional inventory can help take care of seasonal dips.
- A loan can give you a good opportunity to try new products and see how the market responds.
- If you are having a hard time meeting current demand, you can use your loan to increase your stock and consequently your sales.
- If there is equipment that would boost your operations, you can take a small loan and buy it without negatively affecting your cash flow.
- A loan can also be used to fund daily expenses. This way, you get to focus most of your funds to grow the business as opposed to just paying bills.
- If you have debts that are affecting the way you do business, you may consider consolidating the debt and getting a loan to help clear it. Just do your math and ensure that you will not be getting yourself in more financial trouble by taking the loan.
- A business loan can be used for marketing purposes. If you want to attract new customers and keep the loyal ones coming back for more, marketing is important.
A small business loan, when used right, can grow your business to great heights. Just have a game plan on how you are going to use it.
Remember, how you pay your loan will determine how easy or hard it will be for you to get business financing in the future.
So, is a small business loan what your business needs? Have you ever thought of getting one? Are you ready for success?