Business loan

How Funding can Help a Small Business

Small businesses with limited cash often find themselves facing something of a conundrum. They need bigger premises, more staff, more equipment or more stock in order to take on new contracts, which will bring in lots of new revenue. However, before they can take on these contracts and generate this revenue, they need cash upfront to make all of the required improvements. The answer to this problem is funding, which can help to plug the financial shortfall.

A small business loan can help you to:

  • Employ talent. In many start-ups, there is one person trying to do everything by themselves. But to really thrive, your business needs specialists. For example, a marketing expert to properly promote your brand, or a sales consultant to help you bring home those big clients. While a loan isn’t usually used to pay someone’s wages, it can free up cash from other areas of spending (i.e. stock or equipment) that you can use to attract the talent you need to drive the business forward.
  • Buy equipment. If a new piece of equipment can help you double your productivity or vastly streamline tasks, this means far more revenue. Using funding to purchase it is a great idea, as the boost in revenue and productivity means it will pay for itself in no time.
  • Buy stock and fulfil more orders. If the potential is there to take on many new orders and contracts, but you’ll need a cash injection in order to buy the stock to fulfil these orders – it makes sense to use funding.
  • Move premises. Is your existing premises bursting at the seams? Would moving to a larger office space allow you to bring in more staff and equipment, to increase productivity and revenue? If the answer to either of these questions is yes, you can use funding to be able to afford the lease or purchase of a more suitable property.

Using funding to invest in these crucial areas of your business should soon start to show benefits, helping you to grow and expand your operation. However, it’s very important to be realistic, practical and cautious about how much you borrow and how fast you expand. Gradual and carefully considered expansion is often the best method to adopt.

Types of funding

There are several routes you can go down to secure the funding you need for any of the aforementioned goals. You can use an ordinary small business loan or consider cash advance loans – or even go down the crowd-funding route.

Before you start searching for funding, it’s important to sit down and assess exactly how much you need and what you need it for. An investor or funder will need to see precisely how the money will be spent, how it will help the business and how the money will be repaid.

In short, you need a solid plan in place for business growth. It may be a good idea to seek professional financial advice, and to take your time considering your options before applying for funding.

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