Small business loans can be be used in a variety of ways, and they can come from unconventional sources. In fact, now more than ever, it’s common to receive small business loans from a third party lender, over a traditional bank, due to tightened regulations and the availability of funds at banks following the 2008 financial crisis. In fact, small business loans on the balance sheets of banks are down about 20 percent since the financial crisis, according to Forbes. However, because business owners still need funding, third party lenders, like Lendr, have stepped up to the plate, and the loans provided can be used for a variety of small business related matters. The following includes 10 ways in which you can use a small business loan.
- Manage your cash flow.
If one of the main reasons that businesses fail is inadequate or insufficient cash flow, then increase your odds of staying in business and manage your cash flow with small business funding. With an online loan, you can stay ahead of payroll, cover your commercial mortgage expenses, and keep your utilities turned on.
- Purchase equipment.
Many small businesses within a variety of industries often require large machinery or equipment in order to produce and even expand. According to a study by Forbes, over 19% of businesses are looking for working capital specifically for equipment.
- Purchase inventory.
Inventory happens to be one of the most common reasons that business owners borrow money. This is especially true if your business faces seasonality, as there may be times where you need to purchase inventory in advance before making a profit from it during busy seasons.
- Improve your real estate.
Whether it’s a larger facility, storage unit or an improved storefront, small business loans are often used for real estate purposes, especially improvements. “Real estate is two thirds of the assets of small business owners,” so ensure that yours is taken care of and up to par with an online loan.
- Cover your administrative expenses.
Expenses from online financial tools, operational resources, and other small business necessities all require some sort of expense. When it comes to the day-to-day management of your business, a small business loan can help you stabilize and manage your administrative expenses.
- Stay ahead of risks.
One of the challenges of running your own business is that from time to time, you’ll have to weather a few storms. Regardless of how well you plan, unexpected problems, such as a machine failure or a large late payment, can leave you strapped for cash. Managing risks with a small business loan can help you through these tough times.
- Improve your company’s creditworthiness.
Traditional financial companies want to see that your business is able to manage debt well. However, if you aren’t borrowing money, chances are you are unable to prove your creditworthiness. On the other hand, you could also develop a plan to manage your credit better with a small business loan. Either way, you will be able to confidently prove that you can manage your business’s credit well.
- Refinance or pay off other debts.
Consolidating debt can be a smart way to take advantage of small business financing. Refinancing and paying down other debts is a good strategy to get better control of your debt and finances. Just make sure you have a game plan of how you will pay off your new debt with a new small business loan.
- Take advantage of opportunities.
Part of being a business owner is the ability to identify and utilize opportunities that are presented to you. Opportunities can come in a variety of ways, whether it’s a discount on a bulk order of inventory or a bargain on a new office space. If the potential return outweighs the debt, take advantage of what comes your way with a small business loan.
- Expand your business.
More than 80% of small businesses use some sort of financing to grow their businesses. Expansion through adding new products, entering new markets, or adding new locations, is often fueled by a small business loan. In fact, in 2013, businesses spent 35% of financing on expansion purposes, according to the Small Business Administration.
Small businesses are here to stay, so ensure that yours will last as long as possible.
We understand the importance of small businesses and value the role they play in the economy. According to a study, “Small businesses (defined as businesses with fewer than 500 employees) account for 99.7% of all business in the United States.” Small businesses are here to stay, so ensure that yours will last as long as possible. If “two-thirds of business survive two years in business, half of all businesses survive five years, and one-third survive ten years.,” how will your business turn out? Stay ahead of the trends, be mindful of your current and future situation, and take advantage of what you have available to you in the form of small business funding.