One of the biggest misunderstandings involving small business finance is that loans indicate trouble on the horizon. On the contrary, small business loans can act as smart investment vehicles for healthy companies.
What makes this business finance option a good choice under some circumstances? For one thing, a loan allows business owners to avoid draining their corporate (or personal) bank accounts when they need money. And most financial experts recommend that businesses, like individuals, protect their cash stores for emergency situations.
Secondly, getting a small business loan enables companies to take advantage of unexpected surprises in the form of opportunities. Without borrowing funds to cover the price of materials or more equipment, firms might have to say “no” to signing big contracts. That’s not good for growth or profitability.
Finally, occasionally applying for vehicles like working capital loans for small business entities helps manage seasonal revenue fluctuations. Plenty of companies in retail, hospitality, and tourism make money at peak times of the year. Short-term loans get them over these drier spells without forcing them to tap into their financial reserves.
Does this mean that you should apply for a small business loan? It depends. Only you can decide whether now is the time to consider a working capital, traditional small business, or equipment finance agreement. The following questions will give you a better understanding of your needs. If you want to know more about your options, get in touch with Marlin, your finance business partner.
1. Is your business in growth mode?
Do you plan to scale your company over the coming year? If you don’t have spare capital, you don’t have to give up your dream of expansion. Loans can accelerate your growth by enabling you to open up another location, upgrade your technology and tools, source and onboard personnel, and even pay for advertising and marketing.
2. Would you rather keep control of your company than have investors?
Wooing venture capitalists and investors may seem exciting, but the process can take a long time. Additionally, you’ll end up giving your investors a stake in your business, which means you’ll lose some equity. If that’s not appealing to you but you still want access to cash, taking out a short-haul or longer-term small business loan may be a move that will promise capital and peace of mind.
3. Do you want to get attractive interest rates on financing?
Entrepreneurs often consider using their personal credit cards or personal loans to cover business costs, especially during growth phases. However, the interest rates for secured corporate loans can be lower than those for individuals, especially if the business has a decent credit score and clean financial history. The lower the interest rate, the less the loan will cost the business.
4. Are you in need of cash sooner rather than later?
Sometimes, you can wait for a while to get the cash you need. For instance, many people who bring on investors set aside as long as a year to obtain access to funding. On the other hand, if you need capital sooner, you may be able to get approval for and access to funds up to $200,000 within a few days with Marlin.
It’s time to put all the myths regarding small business loans to rest. Not only are loans smart and flexible solutions for businesses, but they’re a safer way to protect your cash reserves without missing a beat — or chance to build your brand.
Need to finance the purchase of tools, technology, or machinery? Consider equipment leasing. Read more about how working capital loans for small business can be part of your equipment financing plan.