5 Reasons to Take Out a Business Loan


If you’re a business owner, the chances are good that you’ve heard the unsettling statistics about new businesses. According to research, around 20% of startups fail in the first year, 30% in the second year, and 50% by the fifth year.

Making sure that your business isn’t part of those numbers can feel tricky, but the truth is that many businesses close their doors for one main reason: financial difficulties. Getting the financial help you need isn’t difficult, and it is often a great way to improve your brand. For this reason, it’s important to prepare ahead of time the 5 C’s of credit so that you can acquire a business loan. Here are a few reasons every company should consider taking out a business loan.

1. To Expand Your Business

One of the most exciting reasons to consider taking out a business loan is the opportunity that an influx of cash can create. Growing your business may mean paying for things like building renovations or more staff members, but business loans can help you cover those hefty upfront costs until you have the added revenue to repay them. Even better, a loan means you won’t have to dial back your operational costs, allowing you to provide the same standard of service your customers have come to expect.

2. To Purchase Equipment

Many new business owners opt to lease equipment rather than buying it to keep costs low. However, this arrangement can cost your company more in the long term, which is why it’s often better to purchase equipment outright. Buying equipment for the first time—or purchasing backup tools in the case of faulty machines—can be a great way to ensure your company’s survival.

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3. To Increase Your Working Capital

As any business owner will tell you, working capital is crucial when it comes to managing your daily business operations. Without proper cash flow management, your business may struggle to tackle unexpected challenges or pivot with the market as needed. Whether you’re looking for a short or medium term loan, taking the time to create a better plan for your working capital can help you remain more competitive.

4. To Increase Your Inventory

New businesses often struggle to manage their inventory, as many business plans require a company to invest in products before customers can purchase them, thus offsetting the business’s initial cost. A business loan can help small brands—especially those with seasonal inventory—to pay for goods in advance as part of their overall business strategy.

5. To Invest in Marketing

Though marketing can often seem like an unnecessary part of a business’s day-to-day operations, the truth is that customers won’t pay for what they don’t know—and marketing is the tool that gets your goods in front of consumers’ faces. Whether you partner with an agency or bring in sales and marketing personnel, a business loan can help you market yourself in a crowded marketplace and increase your overall profits.

Make the Most of Your Brand With Business Loans

At the end of the day, most companies can benefit from additional financial support to improve their operations. Business loans can present great opportunities to expand your brand and enhance your goods and services, so be sure to consider how a loan can help your company succeed!

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Looking for more tips to help you make the most of your brand? Check out our other guides for additional insights.


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