There are several good reasons to take out small business loans, and they all have at least one thing in common: A strong likelihood of increasing revenue and easily paying off the debt that accrues.
Small business loans aren’t meant for companies just looking to scrape by or pay their bills.
The companies that will benefit from small business loans have the chance to reap massive rewards but lack the working capital to take advantage of such opportunities. They are looking to increase demand and pull ahead of the competition.
Opportunities for expansion, however, often come in different forms and can even stem from seemingly negative circumstances.
Here are four signs it’s time for your businesses to take out a loan:
1. BUSINESS IS BOOMING
Demand is on the rise and you don’t have the tools to meet it. There’s not enough space, people, or inventory to satisfy your growing amount of clientele, and you don’t want to lose their business to larger competitors who don’t lack any of these tools.
Solutions could include a string of new hires, securing a bigger or additional space, or purchasing more inventory. All of these changes will lead to increases in revenue since you’ll be able to take on more work than before, preventing profits from shrinking or plateauing.
You don’t want to dig in to the funds used for your day-to-day operations, so it makes sense to take out a business loan that will cover the costs of expansion while allowing you to run your business smoothly. Before consulting a lender, it’s wise to do some calculations to make sure you can pay off the debt and turn a profit without impacting cash flow. Your business may have earned the popularity to become a big-name player, but you’ll only be able to keep that up if you can pay off debt responsibly.
2. YOU NEED NEW EQUIPMENT
No matter the industry, every business needs equipment, and essential equipment will always need to be replaced. Odds are, if a piece of equipment isn’t on the verge of breaking, there’s probably a more advanced and efficient version of it ready to be released.
Your gym might need new treadmills, your office might need new computers, or your convenience store might need a new refrigerator. It’s very difficult to run your business without the most up-to-date equipment, especially considering that faulty equipment can drive away customers seeking reliable service.
Investing in new equipment is absolutely necessary but also requires taping into your business’ cash flow. A small business loan could pay for the equipment and save you from depleting operational funding. One particularly good option for this situation is a merchant cash advance, in which a business is provided lump sum in exchange for a percentage of future credit card sales.
New equipment might not increase revenue right away, but with a merchant cash advance you won’t have to immediately start making fixed payments and can instead pay off the debt when sales begin to pick up.
3. A GAME-CHANGING OPPORTUNITY HAS COME UP
Certain opportunities are just too promising to pass up due to the various rewards that come with them. Maybe you’ve attracted the most reputable client in your business’s history, and he or she is asking for a service you don’t have the money to perform. Maybe a new marketing tool has been released that seems to be designed for your industry. Maybe you’ve come across a fabulous offer on a big chunk of inventory or a new space.
These opportunities are exciting because in addition to a high return on your investment, they will almost certainly lead to a significant boost in clientele. However, they might also tie up several months’ worth of funds, risking your capacity to accompany existing customers. It’s also difficult to dedicate 100% of your focus towards this new investment if you are worrying about being able to pay your bills at the end of the month.
A small business loan, specifically a merchant cash advance, will rid you of these concerns by giving you the ability to simultaneously grow and run your business. The aforementioned investments require lengthy commitments, and you probably can’t afford to be making regular payments at the same time. A merchant cash advance only takes payments when sales are made, so you can use your collective profits from such investments to expand your business even further.
4. YOU’RE EYEING A SUPERB HOLIDAY SEASON
Certain businesses experience tremendous increases in sales during the holidays. A remarkable holiday season could bring in enough revenue to take your business to unprecedented heights. In order to make this happen, you need to stock up on inventory, hire more staff, or conduct an advertising campaign.
The holiday season, however, follows the slow season, when sales are down. With so many investments but so little money available, there couldn’t be a better time to secure a merchant cash advance. Relying on your own funds could force you to raise prices to pay for these investments, putting you at a competitive disadvantage during an already harmful period. Inventory is also much cheaper if it is purchased well before the holidays and in bulk.
Purchasing more than enough inventory allows for more discounts and advertising these discounts will ensure a stronger-than-average holiday performance, one that will easily make up for the investments you made in the previous months. A merchant cash advance saves you from having to make fixed payments during the slow season, which could limit advertising and render you unable to pay your new hires, let alone your monthly bills.
IS YOUR BUSINESS IN ONE OF THESE SITUATIONS?
You have to spend money to make money, and in the case of small business loans, you should only be spending extra money if you have the chance to make more money than ever before. Keep in mind that these methods of expansion are not wants but needs, necessary moves that must be made for your business to evolve. Expanding your business is a lengthy endeavor, and if you work with United Capital Source, you will form a long-term relationship with an expert willing to guide you through every step of this great change. Inconsistencies in revenue are inevitable, which is why UCS offers customizable programs that account for these problems in order to ensure minimal impact on operational costs while the funding is being paid back.
If your business is in position for expansion, UCS is glad to finance the next logical step towards success.
The funding experts at United Capital Source have helped hundreds of businesses meet and increase demand, regardless of their previous credit history. To secure funding that will give your business the revenue boost it has rightfully earned, call 855.933.8638or visit the UCS website. A one-page application is all you need to complete before discussing funding that can reach your bank account in a matter of days.