Using a Loan to Grow your Business

Using a Loan to Grow your Business

Using a Loan to Grow your Business

Business loan, government grants and cash advances are all vital resources when trying to grow or build a business. Capital to buy equipment and product, pay employees and purchase real-estate is essential to the growth and success of your company. If you’re willing to go through the process of applying for a business loan then you need to be prepared to maximise the effect the money will have on your business. The real work begins once you receive the money. Here’s how to use a loan to effectively grow your business.

How to Start

Applying for a business loan or any kind of financial help takes a lot of time and effort so it’s in the best interest of you and your company to make the most informed decision you can make. Deciding to seek financial assistance can and will greatly affect all aspects of your business, therefore asking the right questions should be an essential part of your decision making process. Here are some questions you should ask yourself and your business team to gauge what kind of financial assistance is best for your company.  

  • Do you actually need more capital? And if so how much? And for how long?
  • Is it an emergency? Or can you take time to look around for the best option?
  • What are the risks? Any business, new or old comes with risks. These risks will affect the type and cost of the financial assistance you choose.
  • Is your business currently in a development stage? This could make your needs more critical.
  • What do you plan on doing this the money? All lenders will need to see a business plan.
  • What industry does your business belong to? And what is the current state of that industry?
  • Do you only do business in certain seasons? If your company is seasonal then you’ll need to look for short term loans as opposed to long term loans.
  • Do you currently have a strong management team? Team members with business experience will add credibility to your company. Most lenders will only give loans to business owners that have experience. 
  • Does your long term business plan include room for growth and financial assistance? Business plans are a must when applying for loans and they need to clearly outline how you will be using the money. 

Once you’ve decided that a business loan is exactly what you need to help push your company to the next level you’ll need to decide what to do with the capital. There are endless options and it completely depends on both the type of company and the people who own it. If you know that financial assistance is what you need to grow your company but are stuck on the details of how to use the capital, here are some great ways to use a loan to build your business.

Buy New Equipment

If your company creates a product and requires industrial size equipment to do so then maybe an equipment update is exactly what you need to jump start your growth. Slow and old equipment that was purchased for a discounted price might have been a great choice when you first opened your business but now that you’re trying to improve and grow it’s probably not cutting it anymore. There is speciality financing for equipment that can help you purchase or rent new, faster and updated equipment. Faster equipment means you’ll be able to produce more products in less time which will in turn allow you increase the reach of your product.

New Ads and Updated Marketing

One of the secrets to having a successful business is putting as much effort into advertising your product or service as you did developing it. If you have a great idea but no one knows about it then no matter how great it is it probably won’t be that successful. Having a whole team devoted to marketing can be extremely expensive and probably isn’t an option for most new companies but there are still small improvements you can make. Hire a social media intern, their pay will be inexpensive but the results could double your sales. Take out ads in newspapers and on websites, billboards and TV spots are for larger more established companies. Whatever your budget is, you can’t go wrong if you allot at least some of it for marketing and advertising.

Expand to the Internet

In the past five years having an online presence has become an integral part of many businesses. If you’re looking to expand your company and improve your sales and customer base then expanding to online could be a great option for you. Websites can be more expensive than you think so using a business loan to help finance one is a great option. A customized website that displays your products and explains your services is an investment in your company’s future, one that you’re unlikely to regret.

Develop New Products and Services

Development and expansion are integral parts of business growth, if you want to improve your company then you need be to be innovative and put time and money into the development of new products and the creation of new services. If you don’t put the energy into development then another competitor will.  

Expand Globally

In today’s market roughly 1% of small businesses export their products overseas. The global market is clearly not being utilized by small business owners. Selling your products to overseas countries could potentially open up endless opportunities for expansion and growth. Consumer culture differs from country to country so you’ll need to do your research and hire the right consultants and employees to help with your expansion. This is where a business loan becomes extremely important, sending your products overseas can be expensive but the investment could turn out to be exactly what your company needed.

Hire the Right Employees

Investing in the right people to help you grow your business is a priceless decision. Depending on your business, the people you hire to could be the difference between failure and success. Hire people who are as excited about your company as you are. Take the time to assemble a great team and pay them the salaries they deserve and provide them with the benefits they need. The growth you’ll see in a company with happy employees will surprise you.

How to Choose

Deciding how to use a business loan can be a big decision, one that should not and cannot be taken lightly. Most lenders require a detailed business plan that outlines how the money will be used before they will approve a loan. So you do need to make a choice, but the good thing is you know your company better than anyone else. The areas in your company that need the most work and money should be quite obvious, but take your time and think about how the loan will affect all aspects of your company before you make your final decision. 

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