Why you should take out a small business loan even if you don’t need capital
The concept of loans and borrowing is generally met with apprehension and doubt and these prejudices can often stop you from reaching great heights especially when it comes to your business dreams. It is common knowledge that starting a business requires capital, but it is fairly uncommon for people to consider taking small business loans to finance their business during its early days.
However, the fear of falling into debt at a later point in your business because of the loan you take at the start is a mostly unfounded one and there are more than sufficient quintessential businesses that made the smart move of taking out a small business loan at a point where there was no apparent need for capital.
Need more convincing to grab that loan? Here are some undeniably sound reasons that will make you re-consider applying for a small business loan.
1. You want to improve your credit score
A good business credit score reflects reliability and is the key condition almost all lenders consider before giving out loans to businesses. For the point in the business when you will want to take out bigger loans to finance some bigger decisions, you will need to produce proof that you can repay the loan you take out.
Though there may not be an apparent need for money and capital when you start your business, taking out a business loan that is high enough for it to reflect substantially on your credit score, but low enough for you to pay back over a short period of time (shorter repayment period means lesser interest to pay) without being a burden, is a good way to boost your credit score to secure your business’ future.
2. Your business is seasonal
Most businesses have a prime season and a slower off-season. During the off-season, the sales may drop to a minimum but your expenses don’t. In fact, it is during this time that most businesses chalk out their future money flow and consider investing in equipment and inventory for the prime season.
A business loan is the best option to maintain a steady cash flow and to be able to pay for the expenses you will incur during the off-season.
3. You need to buy equipment and inventory
Equipment and inventory are indispensable components of any given business and though these may depreciate over time, these are also one of the only investments you can claim tax deductions on.
Equipment loans are usually paid on a monthly basis over a period of three or so years whereas loans for inventory last for a shorter period and are less burdening than equipment loans. But either way, though vendors are not particularly expecting upfront payment for either of these, it is always safe to pay these off with a business loan money.
With the extra money on your hand, you will not have to hesitate before making a quality investment for your business.
4. You need to hire fresh talent
You might have started the business with a few people who, for the time being, were good at manning every task you handed them, but over time you will need to hire professionals and fresh talent to handle these tasks.
DIY-marketing lessons and random Facebook ads will never be enough to buoy your business and hiring a marketing professional to do this for you will be in the best interest of your business.
Similarly, hiring an accountant so that you don’t end up breaking your head over all the meticulous accounting, hiring copywriters to write your sales pages and other such professionals can help distribute the work load evenly among your employees, and to do that you will need the capital that comes with taking out business loans.
If you are starting with a small business, hiring isn’t the only choice. Many of the corporate work can be outsourced. For SMEs, outsourcing can be cheaper option than hiring a person for the job. One of the examples is bookkeeping services Singapore. Depending on the number of receipts you have, you can have your bookkeeping done by professionals at an affordable price.
5. You want to take that new opportunity, to take your business to newer heights
Keeping track of all your expenses and making predictions of what each of your future investments may cost you, will help you when you wish to grab an opportunity that presents itself in front of you, but to really embolden you, you will need money at hand to tide over any potential debts that you may land yourself in because of this opportunity.
Take up the business loan only when you’ve made your calculations and are confident that the revenue you will generate from this will be more than your potential debt.
6. It is time that you expanded your business
Business is never about just earning. It is about thriving. And thriving is best envisioned when one considers expanding beyond their base location. Though this will take you several steps closer to your dream of a well- recognized business, it definitely is wrenches a lot of money from your grasp.
To be able to really take the step, you will need a sound business loan to back you up and be the cushion you can fall back on when you are paying out the expenses of expanding or even franchising.
7. Applying for loans has become easier
The hassle one usually associates with offline lending is a thing of the past now with the advent of the concept of online lending and business loan brokers. The application process has become easier and some financial institutions have even relaxed the requirements and the conditions that make you eligible for a business loan.
The submission of merely one application results in offers from multiple lenders so that you can take your pick after comparing their terms and rates. With the desperation to qualify for any loan gone, there really isn’t anything in the way for you to reach out and grab that loan that can be mean all the difference for your business.
And now, for the final tip,…
A business does not always have apparent needs. It is recognizing the latent needs and areas that can do with a precocious investment, that can make a substantial difference to the growth of your business. Reject the opinions that make you reconsider what you secretly believe to be profitable for your business and do the wise thing by taking out a business loan when there is no apparent need for it.