4 Signs It’s Time to Take Out A Small Business Loan

Running a successful business entails a long line of decisions that must be made on a daily basis. Some of these decisions are basic common sense, while others are much more stressful. Without a doubt, one of those challenging decisions is whether you should take out a small business loan.

First, you’re not wrong to be cautious when faced with this dilemma. Rushing into a financing decision is a risky move, regardless of your business’ size and history. But there are situations in which a small business loan can really help a business in a tight spot or allow it to seize opportunities it would otherwise have to pass up.

If any of the following scenarios sound like you and your small business, it could be a sign that it’s time to seek out small business financing.

1. You Need Extra Space, New Equipment or More Hires

Expansion is one of the top reasons business owners take out a business loan. Rapid growth, while exciting, can quickly lead to problems like short staff, limited space and not enough equipment or machinery. The extra cash a business loan provides can help you increase inventory, purchase new equipment, expand to a new location, hire more team members, update machinery, and more.

2.You Need to Create a Cash Cushion for the Off-Season

Many seasonal businesses rely on maintaining a cushion of cash to offset the slower months. Rather than panicking when sales taper off, a cash cushion helps them even out cash flow and operate smoothly until things pick up again. A business loan can help you better manage those seasonal ups and downs without worrying about your business’ future.

3. You Received a Golden Opportunity But Lack Funds

Perhaps you received a large or even multiple orders, a great opportunity to expand but you do not have cash necessary to purchase the supplies and cover payroll to fulfill those orders. The offer is too good to refuse, but you need resources to say “yes”. This is where a business loan can help. The extra funds can help you gather the tools, supplies and manpower needed to take the job on and build a loyal customer base.

4. You Need to Build Credit for Future Endeavors 

Building a strong credit score is important for business and personal reasons. For business owners, taking out a business loan is a great way to secure the funds they need for growth, while also building credit for future business endeavors.

The key to successfully using a business loan for your business’ growth is to be very specific about your intentions from the start. Make sure you’re using the financing for a reason that will improve the health of your business, not to smooth over financing issues that have been left unaddressed. Your financing efforts should leave your business stronger and more flexible.

Michael Hollis is a Detroit native who has helped hundreds of business owners with their merchant cash advance solutions. He’s experimented with various occupations: computer programming, dog-training, accounting… But his favorite is the one he’s now doing — providing business funding for hard-working business owners across the country.