Are you a business owner? Are you short on cash? Are you wondering when is the right time to take out a business loan?
Here’s our guide to help you tell the best time to apply for a small business loan.
If you have started a business and you have somehow fallen on hard times, or you are planning to start one but don’t have the funds to kickstart the project, then you should consider getting a business loan.
As, you well know, having a strong, reliable cash flow is a critical factor to the success of your business.
Fortunately, if you have a great personal credit history and or your business has had a couple few years of verifiable financial transactions history; then you shouldn’t find it difficult to secure a loan.
Keep in mind though, it is not all about getting the loan. You must be sure the timing is right and that you’re applying for the loan only for the right reasons – anything else could mean disapproval of your loan application or worst falling into financial difficulties.
So, how do you tell if the timing for getting a business loan is appropriate or if the motivation is “right”?
Is it the right time to take out a business loan? Here’s how to tell
The following should point you in the right direction:
When a new business opportunity comes along but you’re short on cash
Great business opportunities come along from time to time; the ability to recognize and cash in on these opportunities is what savvy business people are known for.
However, being short on cash can stop you from taking advantage of the new opportunity.
But, it shouldn’t. Taking out a loan in this kind of situation makes perfect business sense.
Care should be taken though. Be sure the opportunity is legit. Do your due diligence. Ask questions. And, ensure, your questions are answered satisfactorily before proceeding to take out the loan.
When you’re planning to expand your business
Business is booming. Sales are great. And, you know it’s the right time to expand your operations to handle the increasing demands. Or perhaps, you even plan to open new locations.
All these will cost money to accomplish. So, taking out a business loan will provide you with the funding you required to execute your plans.
For research and development
The modern economy, as we know it today, is incredibly dynamic. New services and products are emerging every day to replace the old ones.
If you hope to stay at the top of your game in your business, then you need to invest heavily in research and develop.
A small business loan will help to fund such projects, and you will be able to remain relevant in the industry for a long time to come.
You will also be able to retain your old customers while you work on securing – and keeping – new ones for the long haul.
Want to upgrade on your technology, systems, and tools.
Technologies change. What was once a cutting-edge tool could become obsolete within a twinkle of an eye.
As a business owner, you know one way to keep your competitive advantage is to have tools, systems, and processes that enable you to stay as efficient as possible.
You need tools that will enhance business efficiency. Enable you to respond quickly to customer complaints before it escalates, and to mitigate downtimes.
For instance, most businesses are focusing on automating their sales processes, building funnels, setting up chatbots that will cater to clients’ needs, order or inquiries, etc.
To be technologically competitive can be a costly affair, and if you don’t have the funds to put your business in this position, then getting a loan makes a lot of sense.
When you want to restock your inventory and or purchase new merchandise
A collateral-free business loan can help you to purchase new inventory, especially ahead of a busy season – such as the summer holiday, Black Friday, etc.
You want to be ready when the busy time of the year roll by. Taking out business loans to finance your inventory is one option you can explore.
So, there you have it. As a business owner, a business loan should help to ease any financial worries or burden about the future that may be plaguing your mind.
The tips shared in this article should help you to reach quick decisions about whether or not, the time is ripe for you to reach out for a business loan.