Various banks and financial institutions offer different business loan products. However, many business owners, especially those that own SMEs and startups, tend to shy away from this financing option. This is because some entrepreneurs think that getting a loan means paying for another unnecessary expense. Others also consider loans a liability that will cause a lot of problems in the long run.
However, there will be instances when getting a bank loan for your business is inevitable. Whether you own a startup or an SME, there will be certain signs that say getting additional funding will turn your business around or simply make things better for you and your team.
Here are some of the usual signs that indicate your company can use a business loan:
1. You are always running out of stock
Constantly having a low inventory means business is good. Your products are so popular that people keep buying them. But if a business is so good that you find yourself having no supplies to sell, you are wasting a lot of sales opportunities.
This is a clear sign that your business could use a loan. With the additional funds, you can increase your supplies and make sure you always have enough stock to continuously meet the demands of your customers.
2. Your office or store is now too small for your needs
If you already have a small business area to start with, hiring three or more new employees will certainly make your space overcrowded. This is especially true if you need to bring in additional furniture and equipment for your new staff to use.
In case you have increased your inventory and do not have enough space in your stockroom, chances are, you will end up placing your other supplies in the main business area. This will further turn your office or shop into an overcrowded and possibly disorderly space.
The problem with having a congested business place is your employees will soon start feeling uncomfortable and even lazy to work under such conditions. Everyone will also feel embarrassed about accepting and talking to customers since the place is so disorganized and untidy.
The best solution, of course, is expansion. And to be able to move to a bigger place or add another branch, you will need additional funds. This is where a getting business loan can definitely help.
3. You have outdated or insufficient equipment
Today, being tech-savvy will help you get ahead of the competition. But if you and your team are using equipment and software that are already several years old, then your business is not reaping a lot of benefits from the technology you have now.
In case you have the latest devices and systems but two employees have to share one computer, you are also jeopardizing your workers’ level of productivity.
In both instances, you have to consider getting a loan to upgrade your equipment and systems and to ensure all your employees have access to functional and reliable devices anytime.
4. You are having cash flow problems
Most startups and SMEs will encounter cash flow problems from time to time. Even if you are generating significant revenue, money will come out regularly since you will have to pay for supplies, labor and other expenses. Because of this, your cash flow will be affected.
A business loan will help you manage your cash flow more effectively. The additional money you get will enable you to dip into funds when your operational expenses are due, and replenish them when you receive payments.
5. You are behind on some accounts payable
Failing to pay your accounts payable on time can lead to various consequences. You will risk damaging your relationship with your vendors and be unable to process incoming orders as well.
Although a “slow season” is a justifiable reason for your late payments, it doesn’t mean that your vendors will always understand and accept it. If you don’t want to damage your relationship with your suppliers, get a business loan now to settle your accounts payable and continue your operations without any worries.
6. You are presented with a business opportunity that is too good to pass up
There will be instances when an amazing business opportunity will come your way even when you are not in a good financial position to take it up. You may be offered a chance to order bulk supplies at a discounted price, join or sponsor a prestigious event or trade show, or even buy a competitor’s business.
If these breaks are too good to pass up and you are sure they won’t come again, apply for a business or personal loan so that you won’t miss out on these fantastic opportunities.
7. Your business needs a brand overhaul
Lastly, if your business has already hit a wall and you have no idea how to turn things around, the best option would be to give it a complete overhaul.
For this endeavor, you will need to invest in full rebranding, a new team, and even a new office space. All these will require a substantial amount of investment. If you don’t have enough funds for all these processes, a business loan can help you get you going down the right path.
A loan will help you sustain, improve, and save your business. But be sure to get a loan amount that you can afford to pay and not one that will simply sink your business.