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15 Benefits of a Small Business Loan

Benefits of a Small Business Loan

Starting a small business is no simple task. A successful small business requires hard work, careful planning, and an appetite for risk. You’ll need good ideas and a strong work ethic. Most importantly, you’ll need some capital to start out with. Fortunately, a small business loan can help get your new small business off the ground, or even carry your existing business through stormy weather.

1. Covering Real Estate Expenses

Real estate expenses can be reliably calculated over time, and a small business loan can help to provide a fixed amount of time or ownership for real estate expenses. For example, if your business will take six months to start turning substantial profit, a small business loan can extend the time you have to pay your real estate expenses.

2. Relocating Your Business to a New Market

Relocating your business can be a very expensive ordeal. Canceling your real estate contracts, relocating and finding new employees, and of course moving all of your company’s equipment, goods, and other physical capital that you’ll need to function in a new location can be beneficial. A small business loan can cover these expenses and give you breathing room to get things up and running again.

3. Recruiting New Employees

Employees are absolutely essential to turning a profit if you are not running a one person business, but paying them fairly can be expensive. A small business loan can help you find and secure high quality talent in order to get your cash flow up and running if you don’t already have large amounts of capital on hand.

4. Financing Essential Equipment

Whether it’s a factory or a research laboratory, owning the means to produce profitable goods and services can be expensive. Not everyone has large amounts of capital laying around to invest, and a small business loan can give you a kickstart to buy the expensive equipment and materials you’ll need to run a successful business.

5. Surviving an Economic Crisis 

Economic depression and recession is part and parcel of the business cycle, and small business owners often face the brunt of crises among business owners. Even a very solid small business may need time after an economic crisis to become profitable again, and a small business loan can carry you through hard times until you are back on your feet again.

6. Pushing Through a Brief Downturn

Markets can be difficult to predict, and sometimes an unexpected market externality can cause a sudden yet temporary drop in sales and profitability. If the business still has potential to recover when market conditions improve, a small business loan can carry you through to greener pastures. Additionally government small business loans are available for felons.

7. Sustaining Operations Until Profitability

One of the biggest issues that new small business owners face is establishing profitability before your starting capital is expended, which is a very serious concern. In fact, most new small businesses will not make it past the ten year mark, as markets can be very competitive. A small business loan can give you that cushion of time you need to establish a positive cash flow. Government small business loans from the Bahamas are a choice for many prospective business owners, for example.

8. Establishing a Customer Base Through Marketing

Even if you have a really solid product, it can be difficult to generate sales without good marketing. Not only that, marketing can be a very expensive part of your balance sheet, and having sufficient capital to successfully launch a new product or business is not easy. A small business loan can provide the capital you need to show the world your new idea.

9. Raising Capital for New Inventory

You need a solid inventory in order to generate revenue, but you need solid revenue in order to restock your inventory. Unless you have large amounts of capital at hand, it can be difficult or impossible to build your starting inventory. This is why a small business loan can be used to purchase inventory and get the ball rolling for your small business.

Acquiring the correct licenses to legally run a small business can be very expensive, especially if your business works with sensitive or highly regulated materials or  sectors. Additionally, hiring legal counsel to ensure your business won’t run into any legal trouble in the future can also be expensive and place a strain on your budget. A small business loan can cover your legal expenses so you can worry about running a successful business without having to stress about all the red tape that comes with it.

11. Covering Urgent Tax Expenses

Similar to legal expenses, tax payments can be unexpected and prohibitively expensive for a small business. There is only so much you can do to reduce the tax burden of your business, but a small business loan can provide instant tax relief while you build revenue to become established.

12. Expanding Your Business to New Markets

When a business succeeds, it’s natural and sometimes necessary to expand to new markets and grow your operations. This is not an inexpensive effort, and you may need capital upfront to expand before you reap the fruits of new markets. A small business loan can provide that upfront capital for expansion before you are established in new markets.

13. Stabilizing Your Balance Sheet

A rock solid balance sheet is essential to a successful, growing, and long-lasting business. Getting rid of non-performing assets can be costly and expensive in the short term, but beneficial to your business in the long term. A small business loan can help you to optimize your business.

14. Revamping Your Work Space

A modern, up-to-date working space can be crucial to attracting and keeping new talent. A sleek and contemporary business space can impress potential hires and clients and lead to increased revenue. A small business loan might be what you need to renovate your work space.

15. Structuring Larger Loans

It is possible to use a smaller loan to temporarily cover payments on a larger loan, in case your company needs time to develop revenue and meet the obligations of a larger loan. A small business loan can serve this purpose, but remember that it can be dangerous and difficult to repay debts that are taken on to address larger debts.

Featured Image: Megapixl

About the author: A writer specialized in finance, technology, and cybersecurity. Writing books, news, marketing, and educational material. Professional background in ghostwriting and journalism. Passion for music, financial markets, and chicken fried steak.

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