You may have heard the old saying “you have to spend money to make money” and it’s true. If you want your business to grow, you must be able to invest in growth expenses: equipment, advertising, and property.
The problem is that managing all these costs along with the expense of running your business can be difficult, and often impossible, to pay up front for your business needs, until your business has seen more growth. Somehow you can’t grow unless you invest, but how can you invest in your project while keeping money in your business and operating expenses?
The solution may be financing projects through loans.
While borrowing may seem intimidating to small business owners, a loan can help you finance changes in your business that can result in a high return on your investment.
In a way, the biggest hurdle most companies face is finding working capital for growth, continuity, and sustainability.
But in some cases, large sums of money are required.
Simply, project financing loans are a type of loan tailored to companies and not to individuals. It allows companies to access working capital once the loan is accepted by the lender, which can open up a whole range of opportunities for investments, projects and businesses.
Here are five reasons your business may not need funding to succeed:
1.Your project needs to expand!
Perhaps the most obvious reason to consider small business financing loans is to invest in the opportunity to expand and increase the size of your business. When your business is booming, continued financing can help keep you profitable and your returns not diminished.
Of course, there are many costs to additional growth, such as marketing and advertising costs, new property, equipment and appliances, building renovations and headcount, and you’re unlikely to have the money available to cover all of that unless you get the funds to keep your business running.
Loans can help you cover the expenses of expanding your business without eating into your operating cash, so you can continue to serve clients as you grow your business.
- Supply more inventory to ensure business continues!
Inventory is one of the largest and most difficult operating costs in many industries.
The problem is that you have to invest in the products you’re going to sell before your customers can buy them and recoup the cost. Once up and running, you will need to constantly expand and replenish your inventory to keep up with demand and provide better options for your customers. This expense becomes more difficult when your business requires seasonal inventory, such as winter produce.
By taking out a loan to offset inventory costs, you can stay ahead of your competitors and supply customers’ orders and needs without hurting your cash flow.
- Your business needs cash flow
Cash flow is always a challenge for businesses and project owners, and it can continue to be an issue when you’re dealing with customers who don’t pay for services or when you have unsold inventory that needs to be moved to bring in new products, and you can’t afford transportation costs, for example.
These issues become even more problematic when you factor in the fixed costs of inventory, employees, utilities, rent, or real estate and buildings.
A short-term loan or financing provides money to use for normal operating costs, and can help your business stay afloat when profits are low. By keeping the cash flowing to your project, you can continue to attract new customers to increase revenue and profits while making up for other losses.
- Upgrading equipment, or buying new ones to keep pace with growth
Every business has equipment that is necessary to perform the task, such as the machines or equipment that your project uses, such as the production line or even your customers, or your employees, such as equipment that is expensive, and wears out over time.
Unplanned expenses like repairing or replacing broken equipment can cut into your budget, and sometimes operating without that piece of equipment isn’t an option.
Broken or defective equipment can also increase your liability and problems for customers who need reliable and sustainable service, costing you more money in the long run.
Loans can help you manage equipment costs that will allow you to do your job and provide a better experience for your customers.
They can also help you keep your business up to date with the latest technologies that improve your services and customer interaction.
- To improve the applications for a larger loan
If you plan to take out a large loan in the future to expand the business or improve equipment, it may be smart to take out a smaller loan first, especially if your business does not have a credit history.
The first loan you get for your business will likely have less-than-ideal terms, because you haven’t built up your credit yet, and high interest rates will hurt the big purchases that are essential to your business.
One strategy to ensure that you get great terms on a large and vital loan is to take out a small loan that is easy to pay off before you need a big one.
When you pay off the small loan quickly, it may mean that you can get a better deal when you need a larger loan in the future.
Of course, no business, especially a small one, should take on unnecessary debt, but there are times when a loan is the right decision to keep your business afloat or to improve your bottom line.
You can obtain the appropriate loan to finance your project through MCI when filling out the following form: