All opinions are welcome when you announce that your company is considering a loan. All opinions will range from those who are skeptical to those that have experienced the worst.
Even though not every reason for you to borrow money is good, there are still good reasons. Here are six reasons your company might consider applying for a small business loan.
You’re ready expand your physical presence.
Your cubicles have exploded and your assistant had to move into the kitchen. It’s possible that you’ve outgrown your office. You may also have a restaurant, retail store, or other business that has more customers than the space you have.
This is fantastic news! This indicates that business is booming and that you’re ready to expand. Your business may be ready for expansion but that doesn’t automatically mean you have the funds to make it happen.
You might need a short-term loan to finance your big relocation. No matter how big the move is, it will have significant up-front and overhead costs.
Before you commit to anything, assess the potential revenue growth that could be derived from expanding your area. You could still cover your loan costs while still making profit. For a better understanding of how the move might impact your bottom-line, you can combine your existing balance sheet with a revenue projection. Also, if you’re considering a second retail location to expand your business, do some research on the area where you intend to set up shop.
You are creating credit for the future.
If you intend to apply to larger-scale financing for the business over the next few years, it may be possible to start with a small, short-term loan to increase your business credit.
Young businesses often have difficulty qualifying for larger loans because the owners and business have poor credit ratings. Your credit score for the future will grow by getting a smaller loan and paying regular on-time.
This tactic may also help to build relationships and a relationship with a particular lender. This is where caution is needed. Don’t borrow money you don’t have the means to pay. Even one late payment could affect your ability to get future funding.