When’s the Best Time to Get a Small Business Loan?

Small business loans are a great option for business owners who want to expand their companies, but they can also be beneficial when circumstances require extra funding to keep the business running smoothly. But how do you know when you need one? Here are six times when you might consider taking out a loan.

1. You want to expand your location.

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Growing and expanding your business is exciting but it also comes with a lot of additional costs that you may not be ready for, especially if you are growing faster than you planned. A small business loan can help you cover the costs of expanding your physical location. In addition to finding a bigger physical space, a small business loan can also help you hire additional staff and finance more equipment or inventory to meet your needs.

2. You need additional inventory.

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Small business owners need to keep up with demand in order to grow their business and keep their customers happy. A small business loan can help you do just that by giving you the funding you need to purchase additional inventory. Whether seasonal demand has you in a bind or you are growing your business faster than anticipated, a small business loan can give you the funding you need to purchase additional inventory to meet demands.

3. You want to purchase new equipment.

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Unfortunately, the equipment you need to run your business doesn’t last forever. When a surprise breakdown occurs, you may not have the funding on hand to repair or replace it. Similarly, you may not have the funding you need to purchase new equipment when your business is expanding rapidly. This is a great time to apply for a small business loan.

4. You are experiencing lulls in cash flow.

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Whether due to seasonal demand or other slowdown periods in your business, a lull in cash flow can make it hard for you to keep your business running smoothly. A small business loan gives you the funding you need to stock up on inventory or pay monthly bills when you experience fluctuations in cash flow. If you run a seasonal business, it may be beneficial to get a small business loan or line of credit before you need it in order to avoid experiencing any downtime or late bill payments.

5. You need to hire new talent.

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Small businesses or startups often start off with a handful of employees, which requires the business owner and many other team members to wear many hats. For instance, the owner of the business may also handle marketing, human resources and accounting while helping with sales and customer service. As your business starts to grow, you may find that it’s time to hire new talent to take on some of these roles so that you can focus more on your core competencies. A small business loan can give you the capital you need to hire new staff to grow your company.

6. You want to build business credit.

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Building business credit is important for any small business owner. Not only does it help you get better terms on business loans or credit in the future, it can also become a factor in working with certain vendors and obtaining new business from customers. Getting a small business loan and making your payments on time or earlier can help you build business credit that will open up new opportunities for your business in the future.