A profitable business can benefit from acquiring a loan. Often the thought is a loan is needed only when profits are down, but increasing access to working capital can be a key factor in growing a business.
The 2016 Small Business Credit Survey showed many small businesses were profitable but experienced financial challenges and often used personal capital to bridge the gap. Using an alternative lender can help increase the chance of getting the funding a business wants and unlock the opportunity to grow.
Update/Acquire New Equipment
An important and often difficult way to increase productivity and function of a business is to update or acquire new equipment. This can be difficult for some businesses as equipment can be very expensive. While a business may be profitable, they may not have the working capital at hand to spend on expensive equipment that can depreciate over time.
Equipment leasing can be the solution. Leasing equipment instead of purchasing it gives business owners flexibility and can help them avoid those large upfront costs often associated with new equipment. Because technology is continually evolving and improving, a piece of equipment which was top of the line can become obsolete within a few years. Leasing equipment helps business owners ensure they have the best equipment for their business, without continually spending large sums of money every few years or months.
Invest in Marketing
Marketing for a business can often be pushed to the side because of costs. A successful marketing campaign requires a solid budget and sometimes outside assistance. Small businesses often neglect this aspect of their business to use in other areas of their business. However, marketing is an essential part of business growth as a successful marketing campaign can increase sales in a short amount of time.
A short-term loan can give a business the freedom to invest in these types of ventures. Whether your business needs a website, social media promotion or mailer campaigns – having access to more capital creates an opportunity for growth through marketing.
Add More Products/Services
Adding another product to sell or a service provide requires an investment. Increased products/service might require an increase in staff, new equipment or an expansion of the business location. Businesses might know there is a demand for a product/service that they could provide, but aren’t willing to cut into current budgets to add it.
New products/services are a great way to increase interest and traffic for a business – especially if another business in the area does not provide it. Short-term loans can supply the working capital a business needs to increase what they can provide their customers.
Expand to New Markets
Adding another location or branching into a new market can be very costly for a business. The upfront costs alone often prevent businesses from expanding. With that said, the profitability of a business can increase substantially from such a move. Investing using short-term financing can help a business from cutting into current costs to increase their customer base.
For a profitable business, adding debt can seem counter-intuitive. However, there are many ways short-term debt can be the catalyst for increasing overall profitability and growing a business. The first step when considering financing or a short-term loan is to determine how that capital would be used. Knowing how and what the money will be used for sets your business up for success in attaining financing and increasing your bottom line.