Along with a small business loan comes responsibility. You must make sure your spending decisions are good investments that will help grow your businesses.
Your small business loan is actually the foundation for your long-term growth and business success. Whether you are using your loan to expand your business, improving your products or services, or increasing your marketing endeavors to get the word out to consumers, use it wisely. Let’s face it, the more money that comes in, the more reasons you can come up with to spend it. You should create a strategy for loan spending and payback plan to ensure you are getting the most on your ROI from your business loan.
Choose The Right Loan & Lender For Your Small Business
You should always do the necessary research before applying for a loan. What will the best loan for you, will depend on your individual situation. You want to find loans that offer the lowest interest rates and the best terms. There are several different kinds of loans including SBA loans that are endorsed by the Small Business Administration, standard term and fixed-rate loans that you will be paid back over a certain period of time, and alternative financing options.
Another important factor is the condition of your credit score. If you have a great score, there are lenders who may lower their interest rates in order to compete with other lenders. Therefore, know the market and know your worth in order to negotiate the best loan for your business. Also, consider some important preliminary steps that will help you get your small business loan including compiling your business’s cash flow projection, and organizing essential documentation.
Save Up Some Money Before Spending Your Loan
You should always make sure you have the cash flow or cash reserve to start making payments on your newly acquired loan. You should take some of the money and set it aside in a business savings account so you will have the money needed to start paying back the loan from the very beginning.
You should look into your current and projected revenues and then start writing down a realistic repayment plan that will reflect how you plan to use the money to increase your revenue and how you will repay it over the term of the loan. You could take out loans with asset collateral, but it’s not a good idea to use your personal property. Should something happen and you can’t pay back the loan, you will be risking way too much.
Use Some Of This Money For Marketing Endeavors
Let’s face it, if you need a loan, you probably need to get more customers in order to grow your profits and increase your market share. You should set some of this money aside to invest in your marketing strategies. Start thinking creatively, looking beyond television and radio ads, and realize that your marketing does not have to be expensive or a huge undertaking.
Other excellent marketing options should include being more involved in your social media to build a presence. Joining various community organizations and give your website a facelift! Giving a fresh look to your website is actually quite important. People spend a great deal of time searching on Google for “near me businesses and services”.
Even if you have always believed this small business loan is for improving your business, just keep in mind that you must also get the word out about your business help it grow and increase your revenue.
Consider Hiring Some Help
Business owners have a lot on their plates trying to run their small businesses. You have to balance the books, manage your everyday operations, stock and sell your products, expand your services, and the list goes on and on.
You might consider taking a portion of your business loan to hire some experienced help. You do not have to hire people on a full-time basis with all the various benefits. You might consider bringing in freelance help to manage some operations more efficiently and let you get back to other aspects that need your complete attention.
If you already have employees, you might consider offering training and professional development programs. Investing in your employees will be an A+ for your business and will let your employees feel they are valuable to your business and will help them stay connected with advanced development. Training will improve their productivity as well as increase their level of experience.
Debt Consolidation
You might want to look into a debt consolidation program if you qualify. You could simplify your financial obligations to get back up on your feet. Think about getting a business loan with a better interest rate and better terms. Use some of the money to pay off your outstanding debts and loans that have higher interest rates and poor terms.
Consult with your professional loan advisor or a third-party financial expert to decide if consolidating your debt is the best avenue for your small business.
Invest In Much-Needed Inventory & Equipment
In order to stay flexible, there are times you must buy products or upgrade your services. Applying some of your business loan will help you improve your products that your current customers or prospective customers might be interested in It could also give you extra cash to buy inventory at the right time and at the right price.
If you are considering bringing in a new product, start with a small order to test how well it sells. If it’s taking off really well, then and only then, increase your next order.
You do not have to be a service-based business to think about new equipment. New equipment can help your business run efficiently and smoothly. You might want to think “technology” by upgrading equipment such as your computers or performing maintenance on equipment that your business needs to meet your customers’ demands.