Whether you own a startup or a thriving small business, a loan comes in handy in various ways.
Every business needs a loan to boost its sales, as well as expand and grow. It is your ally to keep you on track and even get ahead of the competition. However, it is vital to know the specific reason(s) when getting extra funds.
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As an entrepreneur, a loan can be the secret to your business strategy. Here are 10 best ways to use a small business loan.
Additional Supplies in Inventory
Some businesses experience surging demands on certain seasons.
Let’s say you own a flower shop. You have a steady income and cash outflow until Valentine’s Day comes, wherein you receive a high volume of orders. You just can’t let go of the seasonal opportunity.
Since there is a need to buy more flowers and other supplies than usual, you might need a loan to take this on.
More Working Capital
While running a business requires creativity, it will not survive without a working capital. This is used to spend on daily operation.
However, there may be instances when your fund will not be enough to help your business stay afloat. Add to that the pressure of maintaining your products and services’ top quality. You do not want to lose your loyal customers and clients, do you?
That said, you can apply for a business loan to keep your venture running.
Expanding Your Reach
Having a small business does not mean you will always keep it small. Of course, most entrepreneurs dream to make it big or branch out in other locations. How would you expand without enough funds?
A steady cash inflow and positive return on investment is an indication that you are now ready to expand your business. If your savings is not enough but the timing is hard to pass up, a loan can help you take care of it.
There are a couple of ways to get the equipment you will need for your small business. You can acquire it through a credit card installment program or purchase it outright from the supplier.
Purchasing with a credit card holds a lot of financial risks. That’s because banks can impose outstanding additional interests if you fail to repay on your due date.
If you have some savings, then you can just use a loan to add to your funds and purchase your equipment straight from the supplier. That way, you are turning your additional equipment into a business asset instead of a liability.
Building Up Your Credit Score
Moneylenders and banks give perks to their loyal consumers. If you keep your loyalty to a registered financial institution expect a couple of perks. This can include getting loans with less requirement, faster process, and better customer experience.
In relation to this, keeping a licensed moneylender as your constant financial partner allows you to have easy and convenient access to additional funds in times of need. If you are always on time when paying your loans, this can also help you build up your credit score.
Putting Up a Website
Every small business owner needs to invest in marketing. You need to make sure that your target clients know that you exist and you offer the best in your field.
If you are an entrepreneur who wants to expand your reach, you must understand the importance of online marketing.
According to Forbes, 46% of consumers would check the internet about a store before making a purchase in person. If you are not present online, then you are missing out.
You can use a small business loan to buy a domain, get website premium themes on WordPress, and hire a website developing team.
Old School Advertising for a Small Business
While a website is a vital marketing tool, do not forget that you can still do other advertising practices.
Are there business conferences nearby? Put up a booth. Meet people and introduce your brand. Wear shirts and give away freebies with your company logo. Print out business cards and fliers to give out on every available occasion.
While these marketing tools seem to be quite simple, you might need a loan to fund them. An effective marketing strategy is a good business investment after all.
Good Business Opportunity
Imagine this scenario: You were given a chance to acquire a PHP 100,000 contract. However, this would require you to buy PHP 30,000 worth of supplies and equipment, as well as pay additional help at PHP 5,000.
Would you consider applying for a loan with 10% interest?
A lot of business opportunities may come only once. You need to weigh-in if its potential benefits can compensate the risks involved.
The opportunities that are hard to pass up could be buying a bulk inventory for a lower price, finding a secondhand equipment that you need for your business, or scouting another good location for business expansion. However, these chances could be for a limited time only. If you do not have enough funds but the opportunity can greatly help your business, then it is better to get a loan.
Going back to our example earlier: You will be spending a total of PHP 38,500, and earn PHP 61,500 in exchange.
Hire More Staff
So your business is booming, there is higher demand, and you luckily have enough supplies. However, the more your business grows, the more hands are needed on deck to help you keep up with the sales.
In addition, you will need funds to train your newly hired staff. A business expansion could also mean you will need a bookkeeper and a marketing team.
Why hire more if you already have staff? That’s because employees who handle too many responsibilities is a recipe for disaster. When they are spread too thin, they are prone to making mistakes, which might cause serious consequences to your business.
Get fresh talent rather than risk what you have built up.
Covering Unexpected Expenses
Businesses, no matter the size, can have unforeseen costs. You might have discovered a major leak problem, you need to suddenly purchase more tools, or get paperwork done for your expansion. Short –term loans can help you cover these expenses.
Isn’t it reassuring that you can get your hands into available funds without going through an ordeal? You do not have to lose a lot of opportunities just because you lack some cash. Loans can be your business’s lifesaver in times of need.