As a small business owner, you probably know already that there might be times when unexpected situations arise – take the recent pandemic that blew everyone off. Many businesses were forced to shut, while others barely survived.
The government aimed to help those in need by providing PPP loans for small businesses to keep their employees and pay bills, but the program has reached an end. Your options are not over yet, but you may still have second thoughts when considering a PPP loan (SBA) alternative.
Here are a few reasons why it may actually be a good idea sometimes.
Expanding your business
It makes perfect sense to consider expansion if you are overwhelmed with the products or services you provide. It is the common course of a business. Maybe you have too many employees, or perhaps you run out of space for your products. Expansion is a must, but it must be executed at the right time.
When it comes to expanding your business, SBA and unsecured business loans represent your best options. You need to ensure your expansion is worth it – do some research before expanding your services or products. Keep in mind that it may not always work.
Hiring new people
Multitasking is a primary choice for new or small business owners. But then, there is a time when your business grows and expands. Sometimes, expansion is not about building an extension or getting new products in. It is only about recruiting and hiring new staff to handle the demand – simple as that.
But new staff will bring in extra expenses from the first month – wages and taxes. A small business loan is ideal in this case, just to keep you going until they integrate. For such reasons, business lines of credit and unsecured business loans are your best options.
Expanding the marketing strategy
You need to make money to spend money and your business to be found. If no one knows where you are or what you do, it makes no difference how high your quality standards are. Marketing – in one form or another, online or offline – is a must for every business out there.
Online marketing is as important as an offline alternative in today’s digital age. Sure, there are a few things you can do yourself, but a marketing company or specialist will most likely do a better job than just posting updates over a few media profiles – search engine optimization is just as important.
You can consider more types of small business loans for your marketing needs. Unsecured business loans are probably the best, but many small or middle-sized businesses can also do with business lines of credit.
Upgrading business equipment
Based on the industry you activate in, new technologies may pop up regularly. Some industries can do with the same equipment for years, but others may need to keep up with modern technologies – many of them are more effective and can actually pay for themselves in the long run.
But making an upgrade could be a bit of a challenge. Updating the equipment can make a critical difference in production, effectiveness, and even the cash flow. New equipment and technology will not come cheap, though, and this is when a small business loan kicks in.
Apart from buying equipment, you could also lease it if new technologies are up regularly. All in all, if you do go for a loan, small business administration and business equipment loans are the most common options.
Dealing with unpaid invoices
Different industries or types of businesses will deal with different challenges. For example, contractors, manufacturers, suppliers, or construction workers will likely deal with slow-paying customers. They will send invoices, which may take weeks or even months to get paid.
Too many unpaid invoices will affect the cash flow. At some point, you may run out of money to keep going with the operations. Invoice factoring is the most popular option when you are not sure what type of loan to get for your business.
Invoice factoring means you will use unpaid invoices as a guarantee. You will usually get up to 80% of the value on these invoices. Moreover, you will no longer have to bother waiting for money, as most lenders choose to collect the money themselves on your behalf.
The lender will grab their fees, then send you the leftovers.
Ideally, you should not be in this position, but unexpected situations arise when least expected.
Conclusion
There are more reasons wherefore you could do with a small or middle-sized business loan. Different businesses face different obstacles. Sometimes, a loan is optional – such as if you are just trying to expand. Other times, it is a must.
