A loan can be a lifeline or a doorway to opportunity, depending on how you use it. This is especially true when it comes to sba loans. The major problems that most small business owners run into is misusing their loan money and failing to create a solid plan to repay the funds.
To help you decide just how to use your loan money, we have put together 6 common ways small business owners tend to successfully utilize their small business loans.
Let’s take a look:
To have a successful business, you are going to need a dream team that has the talent to get every project done in a timely manner at the highest quality in your market. Afterall, how else will you be able to justify what your customers are paying for?
The only problem is, even the best team can falter from time to time. Whether they have become complacent or don’t have the skills to get the job done right is up to the situation at hand, but either way, a fresh face on the team can revolutionize your business if they have the proper skillset.
Instead of stretching your available budget to the brink of destruction to hire your new employee, you can take advantage of your sba funds. Don’t let your new ace in the hole slip away because you can’t offer them the money they need to stay with the team. Instead, meet their financial demands with your loan money. Afterall, they will pay for themselves and the loan if they are the superstar you think they are.
Maybe you have just been presented the business opportunity of a lifetime, but you are worried about not being able to fund the project. You know, the type of opportunity that can really make or break your budget in the blink of an eye.
Instead of backing out of the million dollar deal at your doorstep, reallocate your sba funds so you can say yes. If it’s a no brainer business proposal, your funds will return without question.
Your business is taking off, and your funds only seem to be growing. The only issue you have found is the excessive amount of back-orders you have to fill each month because of the lack of capital to properly stock your inventory.
Instead of losing out of potential sales because your inventory is thin, use your sba loan to help your inventory grow. The money is basically guaranteed to come back to your bottom line since you now have the inventory to guarantee your sales.
Don’t let your sales fall behind because you lack to inventory or funds to create your products, use your SBA loan to get everything you need to guarantee your sales.
You’ve noticed a bottleneck in your operations, and it’s coming down to the fact that you only have one machine that can produce your product. You’ve started to run it ragged trying to keep up with your demand, but you are scraping by at best. The solutions? Get another machine!
You can use your loan money to finance another necessary piece of equipment, so you can stop the bottleneck in your operations.
This also works well for replacing broken equipment you can’t afford right away. If you are sure the machine will pay for itself, using your loan money to replace or add to your production equipment is a great way to make sure your can get what you need for your business to succeed.
Are you trying to build your credit? Well, using your sba loan and paying it back in a timely manner is a great way to do just that.
Let’s look at the example of equipment from the section above. If you didn’t have $20,000 to spend your new machine and you decided to use your loan funds to get what you need, paying back the deficit quickly will raise your credit score just as fast.
You can even use these loans to pay back other holes you have created in your financial standing elsewhere. This is especially great if your sba loans have smaller monthly payments than the other places you hold debt. Pay those off, and then focus on repaying your loan money since you don’t have the other debts to worry about.
6 Relocation and Add-Ons
Maybe your operations don’t have the physical space needed to be efficient, or maybe you are simply paying way too much in utilities for your aging building. Whatever the reason may be, you can use your loan money to help with relocating your business.
You can buy land, build your new location, or even simply expand your current building with sba loans.
Don’t keep paying for a location that isn’t working. Step into your new location using your loan money.
You can really take advantage of an approved loan status with a set plan of action. The biggest thing to keep in mind is you need to have a set plan for your loan money before your even start to tap into that fund.
Make sure you know how much you are going to spend you loan money and make a plan to pay it back quickly. You don’t want to get a loan to get out of one hole just to put yourself right into another.
Prepare, plan, pay, and repay
How did you utilize your small business loan? Do you have any tips and tricks to getting the most out of your loan? Share your sba loan stories in the comments below!